China PPI jumps 3.5% year over year in July, says National Bureau of Statistics

China’s producer price index rose 3.5% year over year in July, according to the National Bureau of Statistics. The figure marks another month of factory-gate price increases in the world’s second-largest economy.

The reading follows June’s 4.1% year-over-year PPI increase, which was the steepest since July 2022. That June number itself topped May’s 3.9% gain, meaning July’s 3.5% represents a slight deceleration.

From deflation to acceleration

China’s factory-gate prices spent 41 consecutive months in decline before turning positive in March 2026 with a modest 0.5% year-over-year increase. From 0.5% in March to 3.9% in May and 4.1% in June, the trajectory suggested an industrial sector feeling genuine cost pressure for the first time in years.

The primary drivers behind the broader PPI acceleration have been production material costs. Coal mining, electrical machinery, electronics manufacturing, and ferrous metals processing all contributed meaningfully to June’s headline number. In that same month, purchasing prices for industrial producers surged 6.4% year over year.

What’s pushing prices higher

Ongoing tensions in the Middle East have kept commodity and energy prices elevated, feeding directly into production costs for China’s industrial base. June’s PPI actually fell 0.3% on a month-over-month basis even as the year-over-year figure surged, a reminder that sequential trends don’t always move in lockstep with annual comparisons.

Global ripple effects

For China’s own manufacturers, rising input costs as measured by that 6.4% purchasing price increase in June are climbing against competitive end markets where price hikes are harder to pass through. The sectors most exposed to this dynamic are those in the middle of the supply chain: component makers, processors, and assemblers who buy commodities at market prices but sell into competitive end markets. By contrast, upstream producers in mining and energy tend to benefit directly from the same forces driving PPI higher.

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