China’s Record Deflation Finds Dangerous Cure in Oil Shock

Surging global oil prices stemming from the war with Iran have put China on the cusp of exiting a record streak of deflation well ahead of schedule. But it’s not clear if the economy is better off.

In the weeks before Donald Trump began his barrage, most economists expected China’s producer prices to extend their three-and-a-half year negative streak in 2026. Now, as global energy costs surge, factory prices could snap that funk as soon as this month, according to Wall Street banks including Citigroup Inc. and Goldman Sachs Group Inc. Consumer prices are already edging up.