Key investment points
In November, the year-on-year growth rate of CPI exceeded 2%, while the year-on-year growth rate of PPI peaked and fell. On the one hand, the upward growth of CPI was mainly contributed by new price factors, but it was also affected by the low base in the same period last year. The month on month growth rate of food prices hit a new high over the same period over the years, mainly due to the advent of the peak consumption season, which turned pork prices from decline to rise, with a total increase of about 40%, while the increase in fresh vegetable supply significantly reduced the increase. It can be seen that the upward sustainability of vegetable prices is not strong. Pork prices have fluctuated steadily recently, while fresh vegetable prices have decreased steadily. With the increase of the base in the same period last year, it is difficult for CPI growth to rise again during the year. On the other hand, the rapid rise in the prices of energy and raw materials such as coal and non-ferrous metals has been curbed, and the year-on-year growth rate of PPI has peaked and dropped. However, due to the impact of the high volatility of international crude oil and natural gas prices, the price increases of oil and natural gas, gas supply, textile, food manufacturing and other industries have expanded. Although PPI has dropped year-on-year, it may still maintain a high level in the short term, The downward trend is gentle.
In November, the year-on-year growth rate of CPI exceeded 2%. In November, the year-on-year growth rate of CPI continued to rise to 2.3%, 0.8 percentage points higher than that in October, reaching a new high since September of 20 years. The year-on-year growth rate of CPI increased significantly. On the one hand, it was affected by the low base in the same period last year. On the other hand, it was also related to the new price increase factors caused by the rise of food prices. The year-on-year growth rate of core CPI was 1.2%, down 0.1 percentage points from the previous month, and the trend was relatively stable. In November, the month on month growth rate of CPI increased by 0.4%, down 0.3 percentage points from the previous month. In terms of month on month growth, food prices rose 2.4% month on month, an increase of 0.7 percentage points over the previous month, reaching a new high over the same period over the years. Among them, affected by the seasonal growth of consumer demand and tight short-term supply, pork prices increased by 12.2%, contributing about 40% of the month on month increase of CPI; All localities took multiple measures to ensure the supply of “vegetable basket”. The price of fresh vegetables increased by 6.8% month on month, contributing about 40% of the total increase, but the increase was significantly lower than that of the previous month by 9.8 percentage points. Non food prices changed from up to flat month on month, of which the price increases of industrial consumer goods such as gasoline, diesel and liquefied petroleum gas decreased compared with the previous month; Affected by the reduction of travel after the festival and the spread of the epidemic, the prices of services such as air tickets, travel agencies and hotel accommodation increased negatively month on month.
It is predicted that CPI will decline year-on-year in December. From the high-frequency data, since December, the price of pork has remained stable, the price of eggs and fresh vegetables has decreased steadily, and the price of fruit has fluctuated synchronously and stably. The Ministry of agriculture and rural areas also said that pork prices will remain at the current level, and it is unlikely to rise sharply. When the base increased in the same period last year, we expect that the year-on-year growth rate of CPI in December will fall.
In November, the year-on-year growth rate of PPI peaked and fell. The effect of the policy of ensuring supply and stabilizing price showed that the year-on-year growth rate of PPI peaked in November and fell to 12.9%, down 0.6 percentage points from the growth rate in October, but it is still the second highest since the data record. In November, PPI changed from up to flat month on month. Among them, the price of means of production changed from up to down, which is mainly affected by the decline in the price of energy and raw materials such as coal and non-ferrous metals; The increase of means of living increased by 0.3 percentage points over the previous month. In terms of year-on-year performance, 37 of the 40 industrial industries increased in price, an increase of 1 over the previous month, including coal, steel and nonferrous metals; Affected by the high fluctuations of international oil prices and natural gas, the growth of oil and gas exploitation, gas supply and downstream textile and food manufacturing industries has expanded, which makes the impact of new price factors on PPI flat compared with the previous month.
It is predicted that PPI will continue to fall in December. From the high-frequency data, the international oil price has rebounded since December, while China’s coal price has remained stable, and the steel price has changed from decline to rise. Considering the significant increase in the base in the same period last year, we expect the year-on-year growth rate of PPI in December to decline. In early December, the national development and Reform Commission announced the draft for comments on the signing and performance scheme of long-term coal contracts in 2022, which made it clear that 100% of the coal used by power generation and heating enterprises except imported coal should sign long-term agreements, and the benchmark price of coal in power coal should be raised. The national development and Reform Commission also said earlier that it would guide coal prices to operate within a reasonable range, so as to make coal prices truly reflect the fundamentals of market supply and demand and prevent sharp rises and falls in prices. When the price stabilization measures continue to work, the year-on-year growth rate of PPI is easy to go down but difficult to go up.
Risk tip: policy changes, economic recovery is less than expected.
