Information or event:
In January, the CPI was 0.9% year-on-year (the previous value was 1.5%) and 0.4% month on month (the previous value was – 0.3%).
In January, PPI was 9.1% year-on-year (former value 10.3%) and – 0.2% month on month (former value – 1.2%).
Brief comment:
I. consumption during the Spring Festival is weak, and the price rise is lower than the seasonal level
From a month on month perspective: in January, CPI rose by 0.4% (previous value – 0.3%), weaker than the seasonal level.
The food side was driven by the price rise of the Spring Festival, up 1.4% month on month, but weaker than the seasonal level. Affected by Festival factors, food prices have changed from decline to rise over the previous month. The prices of fresh fruits, aquatic products and fresh vegetables have increased by 7.2%, 4.1% and 3.1% respectively, affecting the CPI to rise by 0.14%, 0.08 and 0.07 percentage points respectively. Compared with their own seasonal level, fresh fruits are stronger, aquatic products are basically in line and fresh vegetables are weaker; The winter curing was basically over, coupled with the accelerated release of live pigs before the festival, the supply of pork was sufficient, and the price decreased by 2.5%, which changed from rise to fall compared with the previous month, affecting the CPI to decline by about 0.04 percentage points. The prices of fresh vegetables, pork and alcohol were weaker than those of previous Spring Festival, which dragged down the rise of food prices during the Spring Festival.
The non food end rose 0.2% month on month, which was also weaker than the seasonal level. Fuel prices were slightly stronger than seasonal due to the upward impact of international energy prices. Gasoline, diesel and LPG prices rose by 2.2%, 2.4% and 1.5% respectively. The prices of clothing, daily necessities and services, education, entertainment and medical care are slightly weaker than the seasonal level.
From a year-on-year perspective: the CPI growth in January this year was weak, while the CPI growth in January last year was relatively high, resulting in a high price base. Therefore, the CPI fell to 0.9% (the previous value was 1.5%) year-on-year.
CPI in February is expected to fall further year-on-year. On the one hand, affected by the peak consumption season of the Spring Festival in that year, CPI rose by 0.6% month on month in February 2021, raising the base, while the consumption of the Spring Festival this year is mainly in late January; On the other hand, high-frequency data showed that since February, with the gradual weakening of the festival effect, the overall wholesale prices of pork and Shenzhen Agricultural Products Group Co.Ltd(000061) continued to fall, and CPI was under pressure month on month. Therefore, the CPI is expected to fall further year-on-year in February, and then the CPI operation center will continue to rise in fluctuations.
II. The lower prices of coal, steel and other industries have driven the overall decline of industrial product prices
From the perspective of month on month: PPI decreased by 0.2% (previous value – 1.2%) in January, maintaining a downward trend.
The price of means of production decreased by 0.2% (the previous value was – 1.6%), which was narrower than that of the previous month. The policy of ensuring supply and stabilizing prices was vigorously promoted, the prices of coal and steel continued to fall, the prices of coal mining and washing industry decreased by 3.5%, and the prices of ferrous metal smelting and calendering processing industry decreased by 1.9%, which was the main factor for the continuous decline of PPI month on month. Affected by the recovery of international crude oil prices, Petrochina Company Limited(601857) related industry prices recovered, and the prices of oil and natural gas exploitation industry increased by 2.6% from a decrease of 6.9% last month. The price declines of chemical raw materials and chemical products manufacturing and chemical fiber manufacturing narrowed by 0.8% and 3.0% respectively compared with the previous month. International non-ferrous metal prices rose, driving the prices of China’s non-ferrous metal smelting and rolling processing industry to rise by 0.8%. In addition, the price of non-metallic mineral products decreased by 1.8%; The price of electricity and heat production and supply industry increased by 2.5%.
The price of means of subsistence was flat (the previous value was 0%), which was in line with the seasonal level. First, food prices changed from rise to fall. Second, due to the rise in oil prices and the booming demand for travel and shopping before the festival, the prices of clothing and consumer durables increased by 0.2%, from decline to rise. At the same time, the prices of general daily necessities increased by 0.1%, which was the same as that of last month.
From a year-on-year perspective: China’s coal and steel supply and stable prices hedged the impact of international crude oil and nonferrous metal prices, continued to decline month on month, superimposed with the increase of the base in the same period of last year, and the PPI in January still fell to 9.1% year-on-year (the previous value was 10.3%).
In February, PPI is expected to turn positive slightly month on month and continue to fall year-on-year. Since February, high-frequency data show that international crude oil and nonferrous metals prices have continued to rise, China’s coal and cement prices have weakened, and the prices of steel and chemicals have rebounded. Overall, PPI may turn positive month on month. However, in the stage of steady growth, the government’s demand for ensuring supply and price stability has further increased, the iron and steel industry has postponed carbon peak time, and there are signs of easing the situation in Russia and Ukraine, Crude oil prices may also fall in the second half of the month, so the probability of PPI rising significantly month on month is low. At the same time, the year-on-year base of PPI continues to rise, and PPI will continue to fall year-on-year.
Risk tip: energy prices have risen sharply.
