Goldman Sachs Raises China 2026 PPI Forecast to 2%
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Goldman Sachs highlights that China's April inflation data continued to reflect an oil-driven reflationalary trend. Headline PPI inflation surged to 2.8% year-over-year in April from 0.5% in March, significantly exceeding Goldman Sachs and Bloomberg consensus estimates of 1.8%. This increase was primarily driven by rising energy and related chemical prices. Meanwhile, headline CPI edged up modestly to 1.2% from 1.0%, as gains in oil and tourism-related services were partially offset by declining food prices. Core CPI only ticked up to 1.2%, indicating that consumer-side inflation pressure remains relatively contained.
Upstream industries accounted for approximately 81% of the PPI rebound. Within the 2.3-percentage-point jump, oil and gas extraction contributed 1.0 percentage point, while chemicals contributed 0.7 percentage point. Producer goods PPI accelerated sharply, while consumer goods PPI remained negative, confirming that price pressures are heavily concentrated at the production stage.
Given the stronger-than-expected April data, Goldman Sachs revised its 2026 full-year headline PPI inflation forecast upward from 1.2% to 2.0%. However, citing base effects, the firm lowered its 2027 PPI forecast from 0.9% to 0.6%. The global AI capital expenditure boom is expected to lift AI-related product prices, which should partially offset the drag from higher bases in 2027.
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