China reported higher producer prices for the first time since 2022, alleviating fears of persistent deflation in the world’s second-biggest economy, but driving concerns of a global wave of inflation resulting from the Iran war.

Higher energy prices resulting from the conflict are beginning to reach Chinese consumers, ING’s China chief economist noted; the US is expected to report its own surge in inflation later today.

Markets have largely upped their bets that global central banks will, as a result, pursue tighter monetary policy: Traders now expect the Federal Reserve, for example, to stand pat this year, compared to a month ago when a majority projected at least one rate cut in 2026.