The deflationary pressure is accelerating its release.

WealthCoffee · 2026-03-22T07:12:44+00:00

The article analyzed China's PPI trends. Although PPI year-over-year growth remains negative currently, it has shown a rapid upward revision trend. The economic recovery following the epidemic has reintroduced cyclical factors, and PPI has experienced fluctuations of rise followed by decline. It is predicted that PPI will enter an upward phase again in the future.

WealthCoffee

2026-03-22 07:12:44

Abstract generation in progress

Although the current PPI year-on-year is still negative and has not turned positive, it has been quickly revised upward, and deflationary pressures are continuously easing.

PPI Resumes Upward Trend

The impact of the pandemic has caused a series of distortions in economic operations, naturally suppressing all cyclical economic activities. However, as the economy gradually rebalances and the scar effects fade, the cyclical forces will once again dominate economic performance.

China’s PPI year-on-year trend has also shown signs of cyclical recovery. After experiencing a brief rise after October 2022, PPI saw a sharp decline. This was partly due to consumer and investor confidence rapidly rebounding and then falling again after easing pandemic controls, as well as international commodity prices bottoming out locally in October 2022, then rising until January 2023 before plunging sharply. It wasn’t until June 2023 that China’s PPI began to recover, continuing until July 2024. The recovery was short-lived—only 13 months—before the upward momentum was interrupted, stopping at the zero mark and entering a new downward trend until June 2025. Over nearly three years from October 2022 to June 2025, excluding the period from October 2022 to June 2023, the PPI year-on-year change generally followed a hump-shaped pattern of rising then falling, typical of cyclical behavior. After June 2025, the PPI resumed its upward trend, reaching a narrow -0.9% by February 2026, with five consecutive months of positive month-on-month growth, indicating a rapid recovery. Unlike astronomical eclipses, cycle troughs cannot be precisely predicted 50 years in advance; they are essentially the “lowest point after the event,” often confirmed 6–18 months after the economic bottom. From a phenomenological perspective, it can be generally confirmed that the PPI has entered a new cycle.

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