Beyond the boost from external input factors, what is the extent of change in the endogenous price momentum? After 44 months, the year-on-year PPI has surpassed the CPI. This signal indeed reflects the phased recovery of upstream prices driven by international oil prices, but transmission bottlenecks persist, with cost pressures in the midstream and downstream sectors continuing to intensify. This also implies that the sustainability of "re-inflation" driven solely by external input factors is questionable. After excluding external disturbances such as international oil prices, the extent to which endogenous momentum drives prices is the key to judging whether the subsequent positive growth in PPI can be sustained.
The year-on-year PPI in April increased significantly by 2.8%, reaching the highest level in nearly three and a half years. The core driver remains international input factors, particularly the substantial rise in prices in petroleum-related industries. This further climb in PPI mirrors the situation in March: rising oil prices strongly impact upstream industries, thereby pulling up overall industrial product prices. It is noteworthy that after excluding the oil price factor, the year-on-year PPI in April showed positive improvement.
Combining the complete consumption coefficients of various industries, sectors that use more crude oil in production (especially upstream) also exhibited higher month-on-month PPI increases in April. Upstream industries such as oil and gas extraction, petroleum and coal fuel processing led in month-on-month PPI growth rates in April, while midstream and downstream sectors like electric power and heat production, and beverage manufacturing were at the bottom. This once again reflects that the current PPI climb is more cost-driven, with benefits concentrated in the upstream of the industrial chain, while midstream and downstream sectors closer to terminal consumption are bearing the brunt of cost erosion from rising raw material prices under pricing pressure.
However, beyond international input factors, the continuous optimization of domestic market competition order also contributes positively. As the effectiveness of curbing "cutthroat" competition becomes apparent, our calculations show that the PPI growth rate in related "cutthroat" industries has already turned positive. This means that even if the short-term surge factor from international oil prices subsides subsequently, the foundation for endogenous repair of China's PPI remains solid.
Turning to the CPI side, under geopolitical influences, the price elasticity of services is "more pronounced." The month-on-month CPI in April rebounded beyond expectations, essentially due to a two-way resonance between external geopolitical premiums and marginal improvement in domestic demand. Imported inflation induced by geopolitical tensions provides the macro "background tone" for the price rebound, while the shift in the focus of downstream price increases towards "services" reflects the structural characteristics of domestic demand recovery.
Driven by holidays leading to concentrated release of offline consumption demand, the price slope in service sectors such as transportation & communication and education & entertainment has steepened significantly, further widening the inflation gap between services and goods.
Under imported inflation, can the momentum of price increases be smoothly transmitted to terminal goods consumption? Compared to services, the month-on-month CPI for consumer goods in April was only slightly higher than the same period last year, with a weak recovery slope. The diminished effect of policy pulses and the front-loaded透支 of demand jointly constrained the recovery momentum of goods consumption.
Looking ahead, whether the driving force of inflation can achieve a smooth shift from "external input" to "endogenous接力" depends both on the接力 intensity of national subsidy funds and requires vigilance against the "crowding-out effect" of price increases on residents' purchasing power. Incremental policy tool reserves may also be introduced in due course to guard against超预期 contraction on the demand side. Risk提示: Future policies may fall short of expectations; changes in the domestic economic situation may exceed expectations; export changes may exceed expectations. Research report information: Securities Research Report: Domestic Inflation Observation Series: April Inflation: A Rebound or a Reset? External release time: May 11, 2026 Report authors: Tao Chuan SAC No. S0590525110006; Zhong Yumei SAC No. S0590525110008; Wu Shuo SAC No. S0590125110064