Event: according to the data of the National Bureau of statistics, the CPI in November 2021 was 2.3% year-on-year, the previous value was 1.5%, and the same period of last year was – 0.5%; PPI was 12.9% year-on-year, the previous value was 13.5%, and the same period last year was – 1.1%.
Main points:
There are two concerns about the price data in November: first, the CPI rise has risen rapidly for two consecutive months. Does this mean that the ppi-cpi transmission effect begins to reflect, and there is a risk of continuous and rapid CPI rise in the later stage? The second is the peak decline in PPI growth in the current month. Can the decline trend be continued next?
In terms of CPI, it was mainly affected by the sharp decline of the price base in the same period of last year, the expansion of the increase in vegetable prices and the narrowing of the decline in pork prices, which led to the year-on-year change of food prices from negative to positive. In November, CPI rebounded rapidly for the second consecutive month year-on-year; In terms of non food prices, the year-on-year increase in November rose slightly to 2.5%, a new high in more than three years, but this does not mean that there are signs of acceleration in the transmission of PPI to CPI. There are two main reasons: first, the increase of core CPI in the current month is still stable and low; Second, except for the rise in energy consumption prices in CPI, the prices of most other commodities continue to fluctuate at a low level.
The month on month rise of PPI in November was significantly weakened, mainly due to the sharp decline in the prices of black commodities such as Chinese coal, as well as the weak and volatile international oil prices under the disturbance of the epidemic, coupled with the increase of the base in the same period last year, the year-on-year rise of PPI in that month also fell, but it is still near the historical high. Affected by the falling prices of energy and some industrial products, the rise of PPI of means of production converged in November, especially the rise of PPI of upstream raw material industry weakened significantly, and the rise of PPI of means of living continued to accelerate driven by cost pressure. The “scissors difference” between PPI of means of living and means of production narrowed in that month, but the gap is still at an all-time high.
Looking forward to the future, with the weakening of the rise in vegetable prices, CPI is expected to fall below 2.0% year-on-year in December. In the later stage, CPI will rise rapidly year-on-year and close to the control target of 3.0%. This means that China’s inflation situation will continue to be generally mild for some time to come, and will not restrict the marginal widening of monetary policy in the first half of next year. In terms of PPI, the tail warping factor of PPI in December is further weakened. In addition, the recent decline in oil price will drag down PPI. It is expected that the year-on-year increase of PPI in December will continue to decline. Next year, the upward momentum of international commodity prices will no longer, and China’s coal and steel prices will tend to be stable. Under the influence of the high base, PPI is expected to decline step by step year-on-year, and there will be a year-on-year negative growth at the end of the year.
