event:
Bureau of Statistics: in November, CPI increased by 2.3% year-on-year, 0.8 percentage points higher than that of the previous month, and 0.4% higher than that of the previous month; PPI increased by 12.9% year-on-year, decreased by 0.6 percentage points compared with the previous month, and became flat from the previous month’s increase of 2.5%.
CPI: pork prices rise, vegetables fall
In November, CPI grew by 0.4% month on month, mainly from food items. Food items continued to rise by 0.7pct to close at 2.4% month on month, and non food items decreased by 0.4pct month on month compared with the previous month, recording a zero growth rate. The price of fresh vegetables dropped significantly, down 9.8pct to 6.8% from the 16.6% month on month growth rate last month. The main reason is that the measures to stabilize the supply and price of fresh fruits and vegetables have been strengthened all over the country. At the same time, the impact of extreme climate factors has been reduced, resulting in an increase in the supply of “vegetable basket”. In sharp contrast, pork prices rose sharply month on month, from the previous value of – 2% to 12.2%. We believe that in addition to the impact of changes in supply and demand in this round of pig cycle, the explanation of short-term seasonal consumer demand growth superimposed on tight supply of fat pigs may be stronger.
PPI: stage high point basic confirmation
The main contribution to the decline of PPI is the means of production. The reason for the decline is the sharp decline in the mining industry and raw material industry month on month. Combined with the purchase prices of industrial producers and the ex factory prices of major industries this month, ferrous metal materials, coal mining and washing industry, ferrous metal mining and dressing industry, nonferrous metal smelting and rolling processing industry have declined to varying degrees, while nonferrous metals Other industrial raw materials and semi-finished products also ended the rise. The supply and demand pattern of subsequent raw materials remains to be observed. If the Omicron virus presents the light virus symptoms of “influenza”, it will have little impact on the overall global economic recovery process, and the contradiction between supply and demand of bulk commodities is expected to be further alleviated.
The scissors difference converges and the space for monetary policy opens
The characteristics of the current economic cycle show that the risk of “stagnation” is higher than that of “inflation”. The main tone of the central economic conference in 2021 is to “stabilize the macro-economic market”. In the face of downward economic pressure, it is more important to maintain economic stability. With the gradual easing of PPI pressure and the high uncertainty of superimposed inflation expectations, it provides conditions for the opening of monetary policy space. Since the statement of “managing the general gate of monetary policy” was deleted from the monetary policy report in the third quarter, the monetary policy tools of comprehensive RRR reduction and structural interest rate reduction have been successively implemented, and the pressure of economic downturn remains in the future. Stabilizing employment and promoting the economy are the main objectives of the government’s work in the next stage. We judge that more fiscal and monetary policies are worth looking forward to.
Risk statement
The economic uncertainty of Omicron virus; The policy exceeded expectations.
