China’s producer price index (PPI) rose 5.0 percent year on year in September, the highest level in four years, while the consumer price index (CPI) climbed just 0.9 percent, a mild and relatively low reading. The widening gap between the two has led experts to warn that small and micro enterprises in the middle and downstream sectors could face greater difficulties.
China’s PPI had contracted for 41 consecutive months between October 2022 and February 2026. It turned positive in March 2026, and gains have generally continued to climb since.
Dong Lijuan, chief statistician at the National Bureau of Statistics’ urban department, attributed September’s increase to rising international crude oil and non-ferrous metal prices, shifting supply and demand in some energy and raw materials industries, and stronger demand tied to the rapid development of artificial intelligence and computing-power-electricity coordination.
Zhang Lin, executive vice president of the Far East Credit Research Institute, said a prolonged gap between CPI and PPI essentially reflects a redistribution of profits between upstream and downstream industries. When PPI exceeds CPI, upstream resource producers generally benefit, while margins in downstream consumer and branded manufacturing, such as food and beverages, home appliances and light industry, as well as retail, are squeezed, often resulting in “more revenue but no more profit.”
Zhang Liqun, a researcher at the State Council’s Development Research Center, said a continually widening gap could create more operational difficulties for middle and downstream firms, especially small and micro enterprises. He noted that many small and medium-sized traditional manufacturers already face clearly insufficient orders, and sustained increases in raw material prices would deepen their troubles.
Source: Central News Agency (Taiwan), October 18, 2026
https://www.cna.com.tw/news/acn/202610180075.aspx