Report summary:
CPI in February was 0.9% year-on-year, unchanged from the previous value; PPI was 8.8% year-on-year, down 0.3 points from the previous value. However, in terms of month on month comparison, CPI rose from 0.4% to 0.6%, and PPI rose from - 0.2% to 0.5%, both of which accelerated significantly. In October last year, there was a month on month pulse peak under the influence of the prices of thermal coal and pork. Later, with the implementation of policies such as maintaining supply and stabilizing prices, the CPI slowed down in November, and the PPI fell sharply from 2% to 0. However, the month on month slope in February this year stood at the highest level in four months, reflecting the emergence of a new round of pulse under the influence of international energy price fluctuations.
CPI in the past five months (October 2021 February 2022) was 0.7%, 0.4%, - 0.3%, 0.4% and 0.6% month on month, respectively.
The month on month ratios of PPI in the past five months (October 2021 February 2022) were 2.5%, 0, - 1.2%, - 0.2% and 0.5% respectively.
Among the 0.2 points of CPI month on month increase, non food was the main driver, especially industrial consumer goods. The price month on month increased by 0.8% from the previous level, mainly driven by the rise in energy prices. In the same period, the prices of gasoline, diesel and LPG increased by 6.2%, 6.7% and 1.3% respectively. We have previously pointed out that "furniture and appliances" is the main project to observe the micro process of PPI transmission to CPI. Household appliances rose by 1.1% month on month in February, significantly higher than - 0.2% of the previous value, and reached a new high since the data. Food prices rose by 1.4% month on month (MOM), which was the same as the previous value. Among them, the decline of pork prices was larger than that of the previous month; The service price is a negative contribution. At the end of the Spring Festival holiday, the service price was flat from the previous increase of 0.3% month on month.
Non food CPI was 0.4% month on month, higher than 0.2% of the previous value. The Bureau of statistics pointed out that the main contribution is industrial consumer goods, and the rise of industrial consumer goods is driven by the rise of energy prices.
In the previous report "price adjustment of industrial consumer goods from the perspective of household appliances", we pointed out that special attention should be paid to the breakdown of household appliances in CPI. The upward trend of household appliances in CPI reflects the conduction of upstream PPI. For example, when the prices of steel, copper, chips and LCD panels rise, there will be price pressure on household appliances. We can pay attention to the micro process of this macro phenomenon.
Food CPI was 1.4% month on month, unchanged from the previous value. Among them, the price of pork was - 4.6% month on month, with a decrease greater than - 2.5% of the previous value.
It is more obvious that the 0.7 point increase in PPI is mainly driven by the prices of internationally priced commodities such as crude oil and nonferrous metals. 2 among them, the price of oil exploitation increased by 13.5% month on month, the manufacturing price of refined petroleum products increased by 6.5%, the manufacturing price of organic chemical raw materials increased by 2.9% month on month, and the price of non-ferrous metal smelting and rolling processing industry increased by 2.0% month on month.
On the contrary, under the background of ensuring supply and stable price, domestic demand pricing commodities basically did not pull upward. In February, the prices of coal mining, washing and processing industry and coal processing decreased by 2.4% month on month. The price of ferrous metal smelting and rolling processing industry increased by 0.7% month on month; The price of non-metallic mineral products industry decreased by 1.0% month on month.
At present, the inflation expectation of China's central oil barrel from the end of January to the end of March has been increased moderately, and the inflation expectation of China's central oil barrel is still below $100 / barrel; (2) There is an upward trend in international grain prices. The United Nations grain price index rose sharply by 4.2 points in February; (3) CRB industrial raw materials were 1.1% and 1.8% month on month in February and the first week of March respectively; CRB metal was 1.7% and 4.4% month on month in the first week of February and March, respectively.
The closing value of IPE oil distribution price from November 2021 to March 2022 (the first week) is USD 69.2, 77.8, 89.3, 98.0 and 128.0 / barrel respectively.
The UN grain price index from November 2021 to February 2022 was 141.5, 140.5, 140.6 and 144.8 respectively.
CRB industrial raw materials were - 1.1%, 1.2%, - 0.4%, 1.1% and 1.8% month on month from November 2021 to March 2022 (the first week); The month on month (MOM) of CRB metal from November 2021 to March 2022 (the first week) were 2.0%, 2.0%, - 0.7%, 1.7% and 4.4% respectively.
Rising inflation will have an impact on the asset side through two transmission paths. One is that it will raise the denominator of asset pricing. This point was elaborated in last year's "long cycle characteristics of inflation and its macro basis". Low traditional inflation is one of the basic preconditions of asset pricing characteristics in the past 10 years. It leads to low discount rate expectation and continuous lengthening of asset duration. Once the premise of low traditional inflation is broken, the results will also change.
In the long cycle characteristics of inflation and its macro basis in July 2021, we once pointed out that inflation has a cycle every 10 years. In the next decade, the hub and elasticity of commodities and global inflation are likely to face an expansion process. First, there is no typical overcapacity as in the past decade; Second, the promotion of global "carbon neutrality" will further boost supply contraction; Third, the manufacturing industry will once again occupy the leading position of the industry, and the emerging manufacturing industry is also rising, which is different from the asset light investment cycle driven by the mobile Internet in the past 10 years; Fourth, in the process of getting out of the epidemic, it is not ruled out that there will be resonance in the capital expenditure cycle around the world; The emergence of five "anti globalization" thoughts is not conducive to reducing manufacturing costs under the principle of comparative advantage. We point out that this will have a profound impact on asset pricing. Low traditional inflation is one of the basic preconditions of asset pricing characteristics in the past 10 years. It leads to the lack of constraints on global monetary policy, unilateral low interest rates and continuous lengthening of asset duration. Once the premise changes, the result will also change.
The second transmission path is through policy space. From the perspective of the annual CPI target of 3%, China's counter cyclical policy room is still obvious in the short term. From January to February, the cumulative CPI was only 0.9%. From the three typical CPI inflation cycles in the past 20 years, the average monthly rate of year-on-year CPI rise was 0.34 points from April 2006 to February 2008 and from August 2009 to July 2011, and 0.35 points from March 2019 to January 2020. Assuming 1.7% in March and 0.34 points from April to October, the CPI will break 3% in July, but the annual cumulative can also be controlled at about 2.7%. At least there is no obvious restriction on the policy space in the first half of the year (about 1.8% cumulative). However, under this assumption, the high monthly CPI in the second half of the year may still form a containment risk to the policy. Looking back on this round of policy cycle, the economic pressure in the third quarter of 2021 was obviously too high, but the PPI was too high at that time (10.7% in September and 13.5% at the peak in October). The main operation of monetary policy was only the reduction of reserve requirements at the beginning of the quarter; After the influence of "ensuring supply and stabilizing price" and the rapid downward revision trend of domestic demand pricing in late October, the policy space showed obvious signs of opening.
From January to February 2022, the cumulative CPI was 0.9% year-on-year. Considering the decline of pork base in March, the impact of oil price continued to pass, and the year-on-year probability increased. We use the consensus expectation of 1.7% (wind caliber) as a benchmark. If the subsequent upward rate is based on the monthly average upward rate of the two rounds of inflation in 20062008 and 20092011, the CPI can exceed 3% in a single month in July and around 4% in October. From November to December, considering the reversal of the base, we pushed downward at the same rate. Then the cumulative CPI of the whole year is about 2.7% year-on-year.
How will the policy deal with steady growth and imported inflation at the same time? In the conflict between Russia and Ukraine and the rise of global inflation uncertainty, we talked about another logic.
The intermediate variables of finance are infrastructure, new infrastructure and affordable housing, while the intermediate variables of currency are real estate and manufacturing; At present, both spaces exist. If the space of monetary policy under extreme circumstances in the future is constrained by global imported inflation, the corresponding leverage space for residents and enterprises is smaller than expected; The policy needs to rely more on fiscal expansion and the driving effect of major projects on the investment rate.
There is indeed an expansion of fiscal space in 2022. Although the annual target deficit ratio is 2.8%, the scale of budget expenditure has increased by more than 2 trillion yuan over last year through the transfer in of two parts: the profits handed over in recent years by specific state-owned financial institutions and franchise institutions according to law and the budget stability adjustment fund. In "how to look at the fiscal policy space in the government work report", we calculate that the actual generalized deficit ratio in 2021 will be about 6.5% - 6.6% after incorporating the cross-year adjustment factor; If all the special debt lines are used this year in 2022, the actual generalized deficit ratio is expected to reach about 7.6% - 7.8%, that is, an increase of 1.0 to 1.3 percentage points month on month. On March 8, the notice of the people's Bank of China pointed out that this year, the balance profits will be handed over to the central government according to law, with a total amount of more than 1 trillion yuan, which is actually equivalent to adding the part of "specific state-owned financial institutions and specialized institutions turn over the balance profits of recent years according to law". This shows that in the current period, the policy is also to expand the performance of steady growth by ensuring financial expenditure as much as possible.
Core hypothetical risk: macroeconomic changes exceed expectations and external environment changes exceed expectations.
