research conclusion
Event: on December 9, the Bureau of statistics released the latest price data. In November, CPI increased by 2.3% year-on-year, 1.5% of the previous value, 0.4% month on month, and 0.7% of the previous value; PPI increased by 12.9% year-on-year, the former value was 13.5%, the month on month growth was 0%, and the former value was 2.5%.
The base effect led the downward growth of PPI, and the measures to ensure price and stable supply effectively suppressed the prices of some upstream raw materials. PPI was flat month on month, and the absolute level of ex factory price was still high, Among them, the price of means of production fell (- 0.1%) month on month, and the price of means of living increased month on month (0.4%) Split point; The downward trend of coal prices and the adjustment of electricity prices have significantly improved the production and industrial prices of electricity and heat, with a year-on-year increase of 2.4%, an increase of 1.6 percentage points over the previous month; The prices of black and non-ferrous metals with large increase in the early stage fell, and the black and non-ferrous metal smelting and rolling processing industries fell by 8.9 and 3 percentage points respectively year-on-year.
Recently, the price adjustment of some food enterprises and other factors have promoted the rise of the price of means of subsistence. The price of means of subsistence increased by 1% year-on-year, an increase of 0.4 percentage points over the previous month, of which food prices rose significantly. Since the fourth quarter, many food enterprises have announced price increases, and the price adjustment has been reflected in the macro data. PPI food items have increased by 1.6% year-on-year, an increase of 0.6 percentage points, of which the price of food manufacturing industry has increased by 3.5% year-on-year, an increase of 0.9 percentage points over last month.
The base effect and higher food and energy prices have pushed the CPI to exceed 2%, and the core CPI is still low. 1) CPI for food items increased by 1.6% (previous value – 2.4%) year on year, pig prices increased from lower to higher, and the year-on-year decline narrowed significantly to – 32.7% (previous value – 44%), and the price of fresh vegetables increased by 30.6% (previous value 15.9%). 2) the increase in energy prices continued to expand, and the price of fuel for transportation increased by 35.7% year-on-year, with an increase of 4.3 percentage points. 3) core CPI increased by 1.2% year-on-year (the previous value was 1.3%), a month on month decrease of 0.2%, which was higher than the seasonal (the average value in 2016-2020 was – 0.02%), and the performance of core CPI continued to be depressed.
The base effect has narrowed the inflation scissors, and the direction of inflation scissors may have ushered in an inflection point. The high level of ppi-cpi scissors difference fell back to 10.6% (the previous value was 12%) in November. Subsequently, with the continuous rise of PPI base, it is expected that the scissors difference will be further narrowed, and the profit distribution of industrial enterprises will also be transferred from upstream to middle and downstream.
From the high-frequency data, the prices of some upstream products continue to fall, which corresponds to the negative month on month growth rate of PPI at the end of the year. In terms of CPI, the pig price may reach the bottom twice, superimposed with the recent decline in crude oil price, and it is expected that the CPI will fall below 2% from the end of the year to the beginning of next year. The coal price with limited supply in China has fallen sharply. Since December, the crude oil price has decreased by 10.6 percentage points compared with the previous month, and the subsequent base will rise further. It is expected that the upward cycle of this round of PPI has ended.
Risk tips:
Epidemic prevention and control led to a drop in total demand than expected;
US fiscal stimulus pushes up inflation, leading to the rise of commodity prices, resulting in imported inflation.
