China’s factory gate prices jump most in four years over Iran war turmoil
Financial Times · 2026-07-09
China's factory gate prices surged by 4.1 per cent year-on-year in June, marking the fastest rise since July 2022 and the fourth consecutive month of expansion, according to data from the National Bureau of Statistics. This increase is primarily attributed to higher energy costs driven by the Middle East conflict, particularly the Strait of Hormuz closure, which has roiled supply chains.
Despite a month-on-month fall of 0.3 per cent in the producer price index (PPI) due to declining international crude oil prices, and the consumer price index rising a moderate 1 per cent last month, experts warn that significant price pressures persist. Capital Economics' chief China economist, Julian Evans-Pritchard, noted that while inflation caused by the Iran war "continued to unwind" in June, Goldmand Sachs identifies downstream sectors, particularly electronic equipment manufacturing, as the main drivers of the PPI increase.
Supply chain experts highlight ongoing shortages of critical industrial inputs such as carbon fibre, PVC, and polyester, with price increases of approximately 30 per cent, 50 per cent, and 30-50 per cent respectively since April. These shortages, exacerbated by export controls and the oil crisis, could impact Christmas goods, with manufacturers of high-tech items like AI chips experiencing significant price hikes and tight supply.
*The full article also explores the specific commodities contributing most to the PPI rise and analysts' forecasts for future inflation trends.*