According to the data of the National Bureau of statistics, in January 2022, CPI increased by 0.9% year-on-year and 0.4% month on month; PPI increased by 9.1% year-on-year and decreased by 0.2% month on month. The main concerns are as follows:
First, the year-on-year increase in CPI continued to narrow as the decline in pork prices expanded. In January, CPI rose 0.9% year-on-year, down 0.6 percentage points from the previous month. Among them, the expansion of pork price decline is the main influencing factor. In January, pork prices fell 41.6% year-on-year, expanding by 4.9 percentage points. First, before the Spring Festival, the enthusiasm of pig slaughter is high, and the supply of pigs has increased in the short term; Second, the winter curing basically ended, and the superposition of the local rebound of the epidemic led to the reduction of people eating out and the decline of pork demand; Third, the base of the same period last year was relatively high. Looking forward to the future, pork price will still be the key to the operation of CPI. From the perspective of the stock of fertile sows, the stock of fertile sows has decreased month on month since July 2021. It is expected that a new round of “pig cycle” will start in the middle of 2022. At present, pork prices are experiencing a bottom rebound stage. Pork prices will remain low in the first half of the year, and the year-on-year increase in the second half of the year will rise as a whole. Affected by this, the increase of CPI will show a trend of low before and high after the whole year.
Second, the policy of ensuring supply and price stability continued to be effective, and the year-on-year increase of PPI continued to fall. In January, PPI rose 9.1% year-on-year, down 1.2 percentage points from the previous month. The main reason lies in the continuous promotion of China’s policy of ensuring supply and stabilizing prices, and the further decline of coal prices. In terms of industries, the price increase of coal mining and washing industry fell by 15.5 percentage points year-on-year, which is the industry with the largest decline among the 40 industrial categories. However, affected by the geopolitics of Russia and Ukraine and other factors, the international crude oil price rebounded again, driving the prices of Petrochina Company Limited(601857) related industries to rise month on month. In January, the average settlement price of Brent crude oil futures was US $85.57/barrel, up 14.4% month on month and 54.68% year-on-year respectively. Looking ahead, it is expected that the year-on-year increase of PPI will continue to fall. In the short term, under the influence of the continuous high international crude oil prices, the decline of PPI in February is expected to slow down. However, in the long run, due to the slowdown of global economic recovery, the gradual easing of energy supply constraints, the accelerated tightening of monetary policy of the Federal Reserve and other factors, the driving force for the continuous rise of commodity prices has weakened, and the rise of PPI throughout the year will decline quarter by quarter.
Third, prices are expected to be moderate and controllable throughout the year, with limited impact on monetary policy. On the whole, China’s prices will maintain a moderate trend in 2022, which will not significantly restrict monetary policy. At present, the downward pressure on China’s economy has increased significantly, which requires macro policies to strengthen cross cycle regulation. Considering the increasing inflationary pressure in the United States, the Federal Reserve will accelerate the tightening of monetary policy. According to CME’s “fed observation”, the probability of the Fed raising interest rates in March reached 100%, of which the probability of raising interest rates by 25 basis points was 50.8%, and the probability of raising interest rates by 50 basis points was 49.2%. Under the background of the deviation of China US monetary policy, the first quarter will become an important operation window period of China’s monetary policy. It is suggested that monetary policy should continue to work forward and accurately to stabilize the economic market.
