Core view
In November, PPI was flat month on month, with a year-on-year increase of + 12.9% and the previous value of 13.5%. PPI began to enter the downward channel, but the decline was lower than the market expectation. With the correction of double control of energy consumption and the strong policy of ensuring supply and stabilizing price, the prices of high energy consuming industrial products generally fell; However, due to the large gap between supply and demand of overseas natural gas and the further promotion of power market reform in October, natural gas and electricity price have increased significantly, which has a certain support for PPI.
In November, CPI was + 2.3% year-on-year, significantly repaired compared with the previous value of + 1.5%, and the PPI CPI scissors difference narrowed, which was mainly affected by the seasonal recovery of food prices and tail warping factors. Affected by the epidemic, the core CPI was – 0.2% month on month, and the prices of air tickets, hotels and tourism fell. Looking ahead, under the influence of the weakening tail raising factor, the recovery range of CPI is limited, and the inflationary pressure is difficult to become the constraint of monetary policy. Stable growth is the primary goal of monetary policy at this stage, and the “four arrows” of Q1 is wide credit.
Energy consumption double control and correction, PPI fell year-on-year
In November, PPI was flat month on month, with a year-on-year increase of + 12.9% and the previous value of 13.5%. PPI began to enter the downward channel, but the decline was lower than 12.0% of the market expectation, which was closer to our expectation. With the correction of double control of energy consumption and the strong policy of ensuring supply and stabilizing price, the price of coal fell significantly, and the prices of high energy consuming industrial products such as rebar, electrolytic aluminum and cement fell generally. Among them, the prices of coal mining and beneficiation, black smelting and nonferrous smelting fell by 4.9%, 4.8% and 1.2% month on month respectively; However, due to the supply and demand gap of overseas natural gas and the further promotion of power market-oriented reform, natural gas and electricity price have increased significantly, which has a certain support for PPI. According to our calculation, the contribution of oil and gas exploitation, electricity and gas supply to PPI is about + 0.3% month on month.
Under the panic of the epidemic, oil prices fluctuated sharply
The crude oil price fluctuated and fell back in November, and the Brent crude oil price once fell to US $65, which was mainly affected by the uncertain factors caused by the Omicron epidemic. Since the second half of this year, the gap between supply and demand of crude oil has continued to expand, inventories have fallen, and oil prices have continued to rise. After the news that the United States released 50 million barrels of crude oil reserves, oil prices have increased, proving that crude oil supply is tight. However, the emergence of Omicron disease has led to a sharp increase in market panic, a significant increase in the uncertainty of crude oil demand and a sharp fluctuation in crude oil prices. According to the current tracking situation, the severe rate of Omicron disease strain is not high, and the uncertainty of the impact on global total demand is weakened. As of December 9, the price of Brent crude oil has been repaired to $76. It is expected that the oil price will remain high until further progress is made in the Iran nuclear agreement and substantial increase in OPEC + countries.
Food items have been significantly promoted, and CPI has increased significantly
CPI in November was + 0.4% month on month, Yoy + 2.3% (market expectation is 2.5%), the previous value is + 1.5%, and CPI has significantly warmed up, mainly driven by the recovery of food prices and tail warping factors. Among them, pork, fresh vegetables and fresh fruits in CPI sub items have increased by 12.2%, 6.8% and 4.3% respectively, contributing a total of 0.4 percentage points to CPI month on month. In non food areas, due to the high prices of crude oil and natural gas, the prices of transportation fuel, hydropower and gas have increased However, due to the outbreak of the epidemic in many areas in China, the repair of the service industry has been greatly impacted, and the prices of air tickets, hotels and tourism have dropped, with the core CPI of – 0.2% month on month, Compared with the same period last year, it further deviated from the historical average level by 1.2% (the previous value was 1.3%). Looking ahead, with the weakening of the tail raising factor, the CPI will fall in December. The recovery range of CPI in the first quarter of next year is relatively limited, and inflation is difficult to become a constraint of monetary policy.
Pig prices rose significantly and the subsequent increase was limited
Pork prices recovered significantly after reaching the bottom in October. According to the Ministry of agriculture and rural areas, the national average pork price rose to 28.6 yuan / kg in late November, about 15% higher than that in late October. This round of pig price rise is mainly affected by three aspects: first, the sharp rise in residents’ demand for cured meat has a significant boost to pork; Secondly, in the early stage, the supply of fat pigs in the recent market was relatively short due to the large-scale loss of farmers; Third, the government’s regulation of pig production capacity and collection and storage have formed a certain support for pork prices. However, on the whole, the oversupply of pigs will continue. In the first quarter of next year, the number of pigs will be at an all-time high, and it is difficult for pig prices to continue to rise.
Risk tip: Sino US friction changes beyond expectations; Covid-19 virus mutation leads to vaccine failure.
