Oil Pushes China's Prices: CPI Up Eighth Straight Month, PPI at 46-Month High

China's deflation shadow is receding on paper: May CPI rose 1.2% for an eighth straight month while PPI, lifted by oil, reached its highest in nearly four years, with firms beginning to pass costs through. But decompose the source: this is imported, cost-push inflation from Middle East crude — not demand-led reflation. The same day brought news of new car sales down 20% year-on-year, underscoring weak household appetite. Costs rising into soft demand squeezes margins from both ends and effectively taxes purchasing power. For the region, two implications: China's cost inflation will travel through supply chains into Asian import prices, and if the era of exported Chinese deflation is genuinely over, the BOJ and other central banks need to mark up their inflation baselines a notch. Watch whether CPI clears 1.5% next month and whether the divergence from consumption data widens.