Today, China's CPI data was released, 0.7%, expected 0.8%, previous value 0.9%!🧐

The scariest thing is not the CPI at 0.7%. It’s the PPI, which has now surged to 5.7%, yet downstream consumers are still unwilling to spend.

This means upstream costs are rising, but consumer demand is not picking up, leaving enterprises caught in the middle, continuing to compete internally and engage in price wars.

The only positive factor is the GDP deflator index, which has finally turned positive. As indicated in the chart below with green columns marking historical periods, the Chinese economy has experienced several periods of “negative GDP deflator index,” such as 7 quarters from 1998 to 1999, 2 quarters in 2009, and 2 quarters in 2015-2016.

Recently, the negative deflator index that lasted continuously from 2023 to early 2026 for 12 quarters, marking a nominal contraction period of 3 years, has officially come to an end, indicating that China is gradually emerging from the risk of deflation, and economic recovery is beginning to show on the enterprise revenue side. Some upstream energy and raw materials companies may benefit first, which is worth noting!🤔

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