China: Producer Prices Surge 2.8%, Largest Increase Since 2022

An Inflationary Signal Tracing Its Way Up the Global Supply Chain

As the world's industrial workshop, China plays a major role in transmitting international pricing. The 2.8% increase in producer prices in April, the largest rise since July 2022, reflects the impact of the energy shock on the production costs of manufactured goods.

For European and American importers, this trend indicates a potential increase in the cost of inputs and finished products in the coming months. The mechanism of imported inflation, which has been partially mitigated in recent quarters by Chinese deflation, could thus reactivate.

Investors are now monitoring whether this acceleration is a temporary oil-related effect or a more lasting trend that could alter central banks' decisions on interest rate paths.

Brent at $103.56 Amidst Iran-Trump Standoff

At the root of this tension on industrial prices, a barrel of Brent crude stands at $103.56, up 2.24%. Iran is demanding an end to the war in the Middle East, the lifting of the blockade on its ports, and the release of its frozen assets, demands that Donald Trump has called « totally unacceptable."

This diplomatic deadlock maintains a high risk premium in the energy market. The Strait of Hormuz, through which a significant share of global hydrocarbon flows passes, remains the main point of vulnerability. Several Western capitals are discussing securing navigation, but with no immediate solution.

The contrast is stark compared to the scenario on May 7, when Brent had collapsed below $99 in hopes of a USA-Iran agreement. The rise above $103 again illustrates the market's extreme sensitivity to diplomatic signals.

Trump-Xi Summit: A Schedule That Weighs on Risk Appetite

Adding to these energy tensions is the upcoming summit between Donald Trump and Xi Jinping. The discussions are set to focus on Iran, as well as tariffs, Taiwan, artificial intelligence, and critical minerals.

This packed agenda adds a layer of uncertainty for the markets, particularly for cyclical and technological stocks, which are exposed to both tariff measures and restrictions on semiconductors and rare earths. Sectors most sensitive to energy costs—such as transportation, chemicals, heavy industry, and distribution—remain exposed to fluctuations in oil prices.

The variables to watch remain the evolution of Brent crude, the situation around Hormuz, and the diplomatic signals from the Trump-Xi summit, three factors that will shape the trajectory of inflation and interest rate expectations over the coming weeks.