event:
1) CPI was 2.3% year-on-year, the previous value was 1.5%, the market expected 2.5%, and Everbright expected 2.4%; CPI was 0.4% month on month, and the previous value was 0.7%;
2) Core CPI was 1.2% year-on-year, and the former value was 1.3%;
3) PPI was 12.9% year-on-year, the previous value was 13.5%, the market expected 12.0%, and Everbright expected 12.7%; PPI was 0% month on month, and the previous value was 2.5%.
Core view:
In November, CPI accelerated upward, which was affected by the low base and the rise of pig and vegetable prices. PPI peaked and fell in November, and the downward inflection point was confirmed. The supply constraints of bulk commodities were eased, and the prices of coal and high energy consuming industries generally fell.
Looking ahead, the steady downward of PPI and the limited upward of CPI will further open the space for loose monetary policy, and the risk of stagflation in the early stage will turn to recession concerns. At the same time, the gradual convergence of inflation scissors will improve downstream profits, and the industry boom will begin to switch to the downstream. Especially in the downstream food and beverage, textile and garment and other consumer goods industries, the upstream cost pressure is relieved, the superposition terminal begins to raise prices, and the profits are expected to be gradually repaired.
The low base and the expansion of food price increase have accelerated the upward movement of CPI. Among them, the price of pork changed from down to up, from – 2.0% in the previous month to 12.2% in the current month, which was mainly affected by seasonal demand growth, farmers’ reluctance to sell, and tight short-term pig supply; Affected by the supply guarantee policy of “vegetable basket”, the increase of vegetable price converged, but the performance is still stronger than seasonality. Fresh vegetables rose 6.8% month on month, higher than the average of – 3.2% over the same period in the past five years.
The core CPI remained low, which was related to the multi-point spread of the epidemic, the easing of cost pressure and weak terminal demand. Non food CPI fell to 0% month on month in November. First, affected by the reduced travel after the festival and the multi-point spread of the epidemic, the service price decreased by 0.3% from a month on month increase of 0.1%; Second, with the gradual easing of raw material supply constraints and weak terminal demand, the upstream and downstream transmission effect has weakened. Affected by the slowdown in the price increase of gasoline, diesel and liquefied petroleum gas, the month on month increase of vehicle fuel and hydropower fuel converged in November; At the same time, the price increase of some industrial consumer goods, such as transportation and daily necessities, fell.
PPI downward inflection point was confirmed as scheduled. As the contradiction between supply and demand of bulk commodities began to ease, the prices of coal and high energy consuming industries generally fell in November. On the one hand, driven by the policy of ensuring supply and stabilizing price, some coal production capacity has been released, the shortage of power supply has been alleviated, and the operating rate of some high energy consuming industries has gradually picked up. On the other hand, it is winter, the demand enters the off-season, and the demand for downstream steel is relatively weak.
PPI fell slowly, lower than market expectations, but did not change the downward trend. First, the decline of coal price according to PPI statistics is significantly lower than that of spot price in the market, which is related to the coal long-term association mechanism and enterprise inventory adjustment cycle, resulting in the relative lag of enterprise ex factory price adjustment. Second, PPI means of living expanded to 0.4% month on month from 0.1% last month, higher than – 0.1% month on month of means of production in the same period. Among them, the increase in food prices was significantly expanded, and the prices of clothing and general daily necessities increased slightly month on month, indicating that some consumer goods enterprises began to raise prices under the rising pressure of raw materials in the early stage. Third, although China’s coal supply began to ease, the rising proportion of China’s electricity price and tight international energy supply continued to promote the rise of PPI. In November, the price of power and heat production and supply industry increased by 1.9% month on month, higher than 0.5% last month, the largest increase since 2013.
Limited upward CPI, steady downward PPI, and further opening of monetary easing space. Looking ahead, considering the repeated epidemic situation, slow recovery of terminal demand, and the upward cycle of pig price has not yet started, the probability of continuous upward CPI is small, and there will be narrow fluctuations in the follow-up. With the easing of commodity supply constraints, PPI is expected to enter a steady downward cycle from November. With the easing of inflationary pressure, the early stagflation risk will turn into recession concern, further opening up the space for monetary policy easing.
