Pork and vegetables drove inflation higher month on month, and food prices rose sharply, Non food prices remained stable: (1) in terms of food, the price of vegetables rose in the first half of the month affected by the weather, and fell in the second half of the month; the price of live pigs rebounded in November, and the price of pork may continue to rise in December; (2) In terms of non food prices, the rise in the prices of hydropower, gas and vehicle fuel stems from the high prices of crude oil, coal and other energy, while the prices of other tourism, education and rent fell.
Vegetables continued to rise, pork prices continued to rise year ago, pork prices rebounded sharply in November, pork prices still rose in December, demand picked up, the national pig market ushered in a long-awaited shock rise, and the demand for new year pigs from December to January will drive pork prices up. Vegetable prices are greatly affected by the weather. In December, cold air activities are frequent, and cooling and snowfall occur from time to time, which will be unfavorable to vegetable growth, picking, storage and other links. The market volume and varieties of vegetables in the South will continue to increase, and the market supply will be relatively smooth for the time being. At the same time, the demand in December is not large, and the vegetable price is expected to fluctuate in December.
Inflation was mild throughout the year and CPI rose month on month in November, mainly driven by the rise in food prices. In November, core CPI fell month on month and year-on-year, still at a low level. In December 2021, the tail warping will affect 1.6%. It is expected that the new price increase factors will rise, and the year-on-year growth rate of CPI is about 2.0%. It is estimated that the CPI growth rate in the fourth quarter may be about 2.0%, the annual CPI growth rate will be 1.0%, the annual CPI growth rate will be 1.9% in 2022, and the CPI will exceed 2% in the third to fourth quarters of 2022.
Cost upward The pig cycle factor will promote the moderate upward inflation in the future. (1) the upward price of raw materials in the upper and middle reaches and the slow upward labor cost will promote the stable upward CPI. (2) the dual control of energy consumption and the big goal of carbon neutralization will remain unchanged, and the cost of living will be slowly pushed up. (3) The main problem facing China’s future economy is the lack of effective demand. To expand effective demand, we need to solve the problem of distribution, that is, to reduce 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 estimated why CPI will rise in the next 2-3 years or so.
PPI will gradually decline in the future. In November, PPI will remain stable month on month. The ex factory prices of commodities in the black industrial chain will fall, but the prices of crude oil and natural gas are at a high level, The prices of related products in its industrial chain continued to rise: (1) the rise of international crude oil prices led to the rise of Petrochina Company Limited(601857) and related industry prices; (2) China’s coal prices have been controlled, and the futures prices fell sharply in November; (3) individual industries in China are still limited in production, and the prices rise.
In December, China’s PPI should continue to fall: (1) the energy price driving the rapid rise of PPI has fallen. (2) the logistics congestion has been alleviated.
It is expected that the PPI will drop month on month in December, the tail warping level of PPI in December will reach 12.1%, the PPI level in the fourth quarter will be more than 12%, and the annual PPI level is expected to be about 8.2%. In 2022, PPI will be high before and low after, and it is expected to be about 4% in the whole year. Affected by the base, PPI may have a negative growth in the fourth quarter.
