Shangyou News:

In May, the PPI's year-on-year growth accelerated while its month-on-month growth slowed. What were the main reasons for this change? Will this upward trend continue going forward? Thank you.

Fu Linghui:

I would like to invite Ms. Wang to answer your questions.

Wang Guanhua:

Thank you for your questions. Driven by both international and domestic factors, industrial product prices have continued their gradual recovery since the second half of last year. From January to May, the PPI rose 1% year on year. In May, the index rose 3.9%, 1.1 percentage points higher than the previous month. Month on month, it rose 0.5%, down from the 1.7% increase in the previous month, marking the eighth consecutive month of increase. Specifically, several features stand out:

First, the driving effect of industrial structure optimization and upgrading continues to grow. In May, sustained demand for equipment renewal in the manufacturing sector, combined with rising prices of some raw materials, pushed prices for ferrous metal smelting and rolling up 1.2% month on month and 1% year on year. The accelerating pace of electrification and applications of AI have significantly boosted demand for computing power, driving up prices in industries such as non-ferrous metals, electronics and electrical machinery. In May, prices for non-ferrous metal smelting and rolling, computer, communication and other electronic equipment manufacturing, and electrical machinery and equipment manufacturing all maintained an upward trend both month on month and year on year.

Second, increased seasonal demand drove price rebounds in some industries. In May, the price in the coal mining and washing industry rose 3.2% month on month, mainly driven by rising stockpiling demand ahead of the peak summer season and increased non-power coal demand from industry and other sectors. In addition, as temperatures rose gradually in May, demand for air conditioners and other cooling equipment increased, pushing up manufacturing prices for household air conditioners by 0.9% and household refrigeration appliances by 0.3% month on month.

Third, the pass-through effects of rising international commodity prices remained. In May, international crude oil prices fluctuated downward, causing domestic petroleum and chemical industry prices to fall. Month-on-month prices for oil extraction and refined petroleum product manufacturing both reversed from gains in the previous month to losses, while the month-on-month price growth in chemicals and chemical fibers slowed significantly. That was also an important reason for the slower growth in the month-on-month PPI. It should also be noted that although international crude oil prices saw some correction, they remained elevated, and the pass-through impact on the domestic petrochemical industry chain persisted. Comparing May this year with the same period last year, factory-gate prices in industries such as oil and gas extraction, petroleum processing and chemicals remained notably higher. We will continue to closely monitor the pass-through impact of international energy price fluctuations on domestic prices.

Looking ahead, the international environment remains complex and volatile, with considerable geopolitical uncertainty. However, China has a strong capacity to ensure energy supply, increasingly diversified import channels, and continued progress in the transition toward clean energy, providing a solid foundation and favorable conditions for coping with external market fluctuations. Thank you.