Abstract: CPI continued to pick up in November, affected by the low base of last year, but also driven by food and non food factors. Although pig prices fell in November, the rise in other food prices contributed to the rise in CPI. Although the international oil price fell, it was not transmitted to China's price in time. The CPI of vehicle fuel continued to rise year-on-year, leading to the rise of new price factors. Bulk commodities fell sharply in November under the influence of policies, and PPI fell both month on month and year-on-year. Although finished product inventory remains at a relatively high level and other factors will block the transmission of PPI to CPI, midstream and downstream enterprises are still facing cost pressure, which will pose a certain pressure on production.
In the medium term, pig prices and oil prices are still the main factors disturbing prices. This year, CPI is at a low level due to the sharp decline in pig prices. However, next year, CPI will rise sharply next year due to the low base of pig prices this year, which may constitute a resonance between pigs and oil. At the same time, we should be soberly aware that the current sharp decline in commodity prices has been affected by policies. Historical experience shows that policy factors can only affect the short term. From the perspective of imbalance between supply and demand, it is difficult for medium - and long-term commodity prices to fall further. We have noticed that relevant prices have stabilized recently. Therefore, next year, We are not only facing the downward pressure of the economy, but also controlling prices is an important task. In this case, the decline of interest rate may face pressure, and the central bank may implement its prudent structural monetary policy with multiple RRR cuts and refinancing.
