According to the data of the National Bureau of statistics, in November 2021, CPI increased by 2.3% year-on-year and 0.4% month on month; PPI rose 12.9% year-on-year and was flat month on month. The main concerns are as follows:
First, the rise in food prices has driven the year-on-year increase of CPI to expand, and it is expected that the CPI increase will narrow in the future. In November, CPI rose 2.3% year-on-year, an increase of 0.8 percentage points over the previous month. The main reasons are: first, food prices have risen more. Food prices increased by 1.6% year-on-year from a decrease of 2.4% last month, affecting the CPI increase by about 0.3 percentage points. Among them, the price of fresh vegetables increased by 30.6% year-on-year, an increase of 14.7 percentage points over the previous month; Pork prices fell 32.7% year-on-year, down 11.3 percentage points from the previous month. Second, the influence of tail warping factor increases. The influence of tail warping factor in November was 0.6 percentage points, an increase of 0.4 percentage points over the previous month. Looking ahead, CPI growth is expected to narrow. On the one hand, winter meat curing and festival consumption will boost pork demand, and pork prices are expected to continue to rise month on month by the end of the year; On the other hand, the effect of the government taking multiple measures to ensure the supply of "cabbage" is gradually emerging, the supply of vegetables is steadily recovering, and the price of fresh vegetables is expected to decline month on month in the future. Further considering the weakening influence of tail warping factors at the end of the year, it is expected that the year-on-year increase of CPI in December will drop slightly, about 1.8%.
Second, benefiting from the implementation of China's policy of ensuring supply and stabilizing price, the year-on-year increase of PPI narrowed, and it is expected that the high point of the upward cycle of this round of PPI has passed. In November, PPI rose by 12.9% year-on-year, down 0.6 percentage points from the previous month. The main reasons are as follows: first, all regions and relevant departments have made great efforts to ensure supply and price stability, and achieved preliminary results. The coal output and market supply have increased steadily, and the coal price has shown a downward trend, driving the growth of coal mining, washing and other industries to fall significantly. In November, the closing price of thermal coal futures averaged 1025 yuan / ton, down 67% month on month. Second, the tail warping factor in November was 1.2 percentage points, a decrease of 0.6 percentage points compared with the previous month. The weakening influence of the tail warping factor directly reduced the year-on-year increase of PPI. Looking forward to the future, considering that China's policy of ensuring supply and stabilizing prices will continue to be effective in the future, the driving force for the continued rise of international commodities will gradually weaken, and the influence of the tail raising factor at the end of the year is 0, the increase of PPI may fall further. PPI is expected to increase by about 11.5% year-on-year in December.
Third, the price inflection point is now. China's inflation will remain generally mild for some time to come, and the ppi-cpi scissors gap will narrow. First, the rise of PPI will fall from a high level. Affected by the slowdown of global economic recovery, the gradual easing of energy supply constraints, the adjustment of the monetary policy direction of the Federal Reserve and other factors, the driving force for the continuous rise of commodity prices has weakened. Further considering the base factor, it is expected that the increase of PPI will decrease quarter by quarter in 2022. Second, under the influence of pork prices, CPI is expected to rise from low to high in 2022. By the end of November, the national pig grain price ratio was about 6.5, at a historically low level. Since July 2021, the number of fertile sows began to decline month on month, and the decline expanded month by month. The relationship between pork supply and demand will change in the future. A new round of "pig cycle" will start in mid-2022. It is expected that CPI will remain low in the first half of 2022, and the increase will expand in the second half of 2022, showing a trend of low in the first half of the year and high in the second half of the year.
