China factory prices hit near 3-year high, consumer inflation flat
China's factory prices just jumped to a near three-year high (up 3.9% in May 2026), mainly because global energy costs are soaring and AI-related industries are booming.
This marks the third straight month of rising producer prices, outpacing both last month's growth and what experts expected.
Meanwhile, everyday consumer prices stayed pretty flat, thanks to weaker spending and cheaper food (especially pork).
Economists warn China over energy costs
Energy disruptions, such as tensions in the Strait of Hormuz, have pushed up costs for factories across China.
Tech and AI sectors are riding the wave of higher demand, but carmakers and others are struggling to keep up as gasoline prices shot up 23.5% from last year, and fuel use actually dropped by 13%.
Economists warn these rising costs could squeeze company profits even more and make it harder for people to spend, putting extra pressure on China's economy right now.