China's factory-gate prices return to growth after three years, rising 0.5% in March as oil prices surge amid Middle East tensions. The producer price index ended the longest deflationary streak in decades, though consumer inflation missed forecasts at 1% versus expected 1.2%. Oil's dramatic rally, with Brent crude up 33% since late February and WTI up 47%, is driving input costs higher. Economists warn this input-cost shock could trigger "bad inflation," further squeezing manufacturers' already-thin margins. China's massive strategic oil stockpiles and energy diversification provide some cushion, but risks remain. Morgan Stanley estimates China's PPI will rise 1.2% this year and has cut GDP growth forecasts to 4.7%, with potential slowdown to 4.2% if oil prices exceed $150 per barrel.
