The Spring Festival effect of CPI is not obvious, and inflation rose slightly month on month, mainly due to the rise of food prices. Prices in January showed festive characteristics, but their increase was lower than that of the Spring Festival in previous years. The blockade of covid-19 epidemic caused low consumption: (1) in terms of food, the weather in January was fine, the supply of vegetables was stable, and the price of vegetables was low; The slaughter of live pigs accelerated in January, and the price of pork fell in January; (2) In terms of non food prices, affected by the rising price of crude oil, the price of fuel for transportation increased; The Spring Festival effect is lower than that in previous years. The price rise of family services (4.7%) did not significantly drive the price of daily necessities (- 0.1%), and the overall service price only rose by 0.3%.
Vegetables gradually entered the off-season, pork prices remained volatile, and pork supply increased in January, but the demand was still not ideal. Pork prices are already near the cost line, and pork prices are expected to fluctuate slightly in February. The price of vegetables is greatly affected by the weather. The overall weather in January was fine, the vegetable production during the listing period was stable, and the vegetable price fell in the first half of the month. In the second half of the month, vegetable prices rose slowly with the arrival of the Spring Festival, and the overall increase was lower than that of the Spring Festival in previous years. Vegetable prices fell steadily after the festival. We should pay attention to the rainy and snowy weather in the country in mid February, the vegetable transportation and supply was slightly sluggish, and the prices were repeated. The overall trend of vegetable prices is within the historical range.
Inflation was mild throughout the year, and the tail warping in February 2022 affected 0.3%. It is expected that the new price rise factors will rise, and the year-on-year growth rate of CPI is about 0.7%. It is estimated that the annual CPI growth rate in 2022 will be 2.0%, and the CPI will exceed 2% in the third to fourth quarters of 2022. (1) The slow recovery of China’s consumption and the slow growth of personnel wages, coupled with the strict control of covid-19 epidemic, have seriously affected the growth of consumption, and China’s inflation is still at a low level. (2) The price of industrial products has dropped, and it is still difficult to transmit the price of industrial products to consumer goods. It is difficult for consumers to accept the upward price. (3) The pig cycle may reverse in the second half of 2022, and the reason for the year-on-year base will drive the CPI upward in the second half of the year.
Moderate inflation in the future (1) the rising prices of raw materials in the upper and middle reaches and the slow rise of labor costs have promoted the steady rise of CPI. (2) The dual control of energy consumption and the big goal of carbon neutralization remain unchanged, and the living cost of residents will be slowly pushed up. (3) The main problem facing China’s future economy is the lack of effective demand. Expanding effective demand needs to solve the problem of distribution, that is, reducing the polarization between the rich and the poor in the whole society, which still takes time. The overall upward probability of CPI is very small, and it is expected that CPI will rise moderately in the next 2-3 years.
PPI will gradually decline in the future. In January, PPI fell month on month, and the ex factory price of goods in the black industrial chain fell, but the crude oil price rebounded, and the prices of related products in the industrial chain rose and fell with each other: (1) the rise of international crude oil price led to the rise of Petrochina Company Limited(601857) and related industrial prices; (2) China’s coal price has been controlled, the rise of futures price narrowed in January, and the market trading price fell; (3) China’s individual industries are still limited in production, and the non-metallic mining and beneficiation industry is up 0.8%; (4) The consumer industry rebounded slightly, and the food manufacturing industry rose by 0.3%.
In February, the base level continued to decline and may stabilize month on month, but China’s PPI continued to fall: (1) the energy price rebound that led to the rapid decline of PPI. In February, energy prices continued to rise, driving prices to rise; (2) Under the epidemic situation, consumption is low, production is low and balanced, and the rise of terminal prices is not smooth; (3) Logistics congestion has been alleviated, and BDI, which mainly reflects the transportation of bulk commodities, has declined, indicating the decline of PPI in the future.
The PPI is expected to rise slightly month on month in February. The tail raising level of PPI in February is 8.3%, and the PPI level is expected to be about 8.5%. In 2022, PPI is expected to be around 4% in the whole year. Affected by the base, PPI may have a negative growth in the fourth quarter.
