Key investment points:
Event: China’s CPI in February rose by 0.9% year-on-year, expected to rise by 0.84%, and the previous value rose by 0.9%. In February, PPI increased by 8.8% year-on-year, expected to increase by 8.76%, and the previous value increased by 9.1%.
CPI rose steadily year-on-year, and the year-on-year decline in pork prices expanded slightly. In February, the year-on-year growth rate of CPI was 0.9%, which was the same as that of the previous month. Specifically, food prices fell by 3.9%, an increase of 0.1 percentage points over the previous month, affecting the decline of CPI by about 0.76 percentage points. In food, the price of pork decreased by 42.5%, an increase of 0.9 percentage points over the previous month, and has achieved a negative growth of more than 30% for nine consecutive months year-on-year; The year-on-year increase in the prices of fresh fruits (6.6%), edible vegetable oil (6.4%) and aquatic products (4.9%) fell compared with the previous month. Non food prices rose by 2.1%, an increase of 0.1 percentage points over the previous month, affecting the CPI rise by about 1.68 percentage points. Among non food products, international energy prices led to a year-on-year increase in industrial consumer goods. In February, the price of industrial consumer goods increased by 3.1%, an increase of 0.6 percentage points over the previous month. Among them, the prices of gasoline and diesel increased by 23.9% and 26.3% respectively. Service prices rose by 1.2% and fell by 0.5 percentage points, of which air tickets and tourism prices rose by 18.0% and 4.5% respectively, down from the previous month; The growth of education services (2.7%) and medical services (0.9%) was the same as that of the previous month.
CPI rose slightly month on month, with non food items as the main driving items. In February, CPI rose by 0.6% month on month, with a month on month growth rate of 0.2 percentage points. Among them, food prices rose by 1.4%, which was the same as that of the previous month, affecting the rise of CPI by about 0.26 percentage points. In terms of food, the Spring Festival holiday is the peak consumption season, and the prices of fresh vegetables (6.0%), aquatic products (4.8%) and fresh fruits (3.0%) have increased month on month; The prices of chicken, duck, beef and mutton also increased by 0.3% – 1.4%; Pork and eggs were in sufficient supply, with prices down 4.6% and 3.7% month on month, respectively. Non food prices rose by 0.4%, an increase of 0.2 percentage points over the previous month, affecting the CPI rise by about 0.34 percentage points. In non food, the geopolitical conflict led to the continuous rise of energy prices, and the prices of industrial consumer goods increased by 0.8% from the same level last month. Among them, the prices of gasoline, diesel and LPG increased by 6.2%, 6.7% and 1.3% respectively. Service prices were flat from a 0.3% rise last month. Among them, the local spring festival has driven the demand for cultural and entertainment consumption and suburban tourism, and the prices of films, performances and accommodation have increased by 9.3% and 2.2% month on month respectively; After the festival, migrant workers returned to the city one after another, and the service supply increased. The prices of housekeeping services and maternal and infant care services decreased by 6.8% and 1.9% respectively.
PPI rose and fell year-on-year. In February, the year-on-year increase of PPI fell, recording 8.8%, down 0.3 percentage points from the previous month. Among them, the price of means of production increased by 11.4%, the increase fell by 0.4 percentage points, and the price of means of living increased by 0.9%, the increase expanded by 0.1 percentage points. Among the 40 industrial categories surveyed, prices rose in 36, unchanged from the previous month. Among the main industries, the year-on-year growth of coal mining and washing industry (45.4%), chemical raw materials and chemical products manufacturing industry (19.7%) and ferrous metal smelting and rolling processing industry (12.9%) decreased by 5.9%, 1.3 and 1.8 percentage points respectively. The oil and gas exploitation industry (41.9%), petroleum, coal and other fuel processing industry (30.2%) and non-ferrous metal smelting and rolling processing industry (20.4%), with year-on-year growth rates of 3.7, 0.1 and 0.6 percentage points respectively. On a month on month basis, PPI increased by 0.5% from a decrease of 0.2% in the previous month. By industry, the sharp rise in international crude oil prices has driven up the prices of Petrochina Company Limited(601857) related industries. Oil exploitation price (13.5%), refined petroleum product manufacturing price (6.5%) and organic chemical raw material manufacturing price (2.9%) all increased in varying degrees month on month. The work of ensuring the supply and price of coal continued to advance, the price of coal continued to fall, and the prices of coal mining, washing and processing industry and coal processing decreased by 2.4%.
In the future, the year-on-year growth rate of CPI will rise steadily, and PPI will remain high and volatile. On the whole, the year-on-year growth rate of CPI in February was stable, and the growth rate of PPI fell, but remained high. The chain CPI continued to rise, the PPI turned from decline to rise, and the ppi-cpi scissors gap further narrowed. Looking forward to March, in terms of CPI, the current pork price has not reached the bottom, and household consumption is relatively sluggish. However, the continuous rise of international energy prices, coupled with the recent continuous rise of feed prices, may periodically push up the reading of year-on-year growth rate of CPI. In terms of PPI, geopolitical conflict led to the continuous upward trend of energy prices superimposed with low base effect, which promoted the year-on-year growth of PPI. However, with the steady progress of the policy of ensuring supply and stabilizing price, the management firmly curbs excessive speculation in commodities, which is expected to stabilize commodity prices. However, due to the short-term political conflicts on the mainland edge, the strength of the steady growth policy and the relatively low base in March 2021, the year-on-year growth rate of PPI in March may remain high and volatile.
Risk tips: repeated outbreaks at home and abroad, changes in commodity prices, and unexpected changes in China’s policies
