Bank of America upgraded its projections for China’s 2026 inflation, citing stronger domestic demand, higher energy prices, and gains in metals and electronics tied to artificial intelligence investment.

The bank raised its forecast for 2026 consumer price index inflation to 0.7% from 0.1%. It also lifted its producer price index inflation projection to 0.3% from negative 0.7%.

The revision reflects three factors: a cyclical upturn in domestic demand visible in January and February data, higher projected energy prices due to the Iran conflict, and a rally in metals and electronics supported by structural tailwinds from the AI investment cycle.

The forecasts are based on oil price projections as of mid-March. Bank of America said the estimates remain subject to further revision given ongoing volatility in energy markets.

The bank referenced its report titled “Iran FAQ: Dire Strait” in connection with the energy price outlook.

Source: Investing.com