Although the year-on-year growth rate of CPI in February was flat, the core CPI decreased slightly and the performance of service price was relatively weak; Household appliance prices are significantly stronger month on month, and pay attention to the transmission from PPI to CPI; In February, the year-on-year growth rate of PPI continued to decline, but the prices of international crude oil and non-ferrous metals rose sharply, which had a significant impact on the prices of China’s industrial products; Mid March is still the window for monetary policy adjustment.
In February, CPI increased by 0.6% month on month, 0.9% year-on-year, core CPI increased by 1.1%, service prices increased by 1.2% year-on-year, and consumer goods prices increased by 0.7% year-on-year. From the perspective of sub items, the higher year-on-year growth rate in February was transportation and communication (5.5%), followed by education, culture and entertainment (2.5%) and residence (1.4%), and the price of food, tobacco and alcohol decreased by 1.8% year-on-year, which was the same as that in January.
From a year-on-year perspective, food prices fell by 3.9%, affecting the CPI decline by about 0.76 percentage points, non food prices rose by 2.1%, affecting the CPI rise by about 1.68 percentage points. Food prices still suppressed the year-on-year increase of CPI. In non food, the price of industrial consumer goods increased by 0.8% month on month, mainly driven by the rise of energy prices.
The year-on-year growth rate of CPI began to rise since March. The year-on-year growth rate of CPI in February is still low, mainly affected by food prices. Since March, the influence of base effect has reversed, and the year-on-year growth rate of CPI is expected to rise significantly. In addition, we need to pay attention to two things. First, the price trend of the service industry in February CPI is affected to some extent by the increase in service supply after the Spring Festival, but since the middle and late February, there has been an epidemic in many provinces across the country, and the demand for the service industry has been significantly restrained. Second, the price of household appliances increased by 1.1% month on month in February, and we should pay attention to whether there are signs of PPI transmission to CPI. Maintain the previous view that inflation was still low in February, and if monetary policy adjustment should be made as early as possible, the middle of March is an important time window.
In February, PPI increased by 0.5% month on month and 8.8% year-on-year, including 11.4% year-on-year growth of means of production and 0.9% year-on-year growth of means of living. Ppirm increased by 11.2% year-on-year.
On a month on month basis, the sharp rise in international crude oil prices has driven up the prices of Petrochina Company Limited(601857) related industries. Affected by international factors, the prices of China’s non-ferrous metal smelting and rolling processing industry have risen, and the coal prices have continued to fall; From a year-on-year perspective, among the 40 industrial categories surveyed, 36 prices rose, the same as last month. Among the main industries, coal mining, chemical raw materials, ferrous metals and chemical fiber saw their price increases fall, while oil and gas, oil and coal processing, nonferrous metals and public utilities saw their price increases expand.
PPI may fall slower than expected. In February, the prices of international crude oil and non-ferrous metals rose sharply, resulting in a large increase in the prices of China’s industrial products. In the future, the year-on-year growth rate of PPI may still decline as a whole, but the decline rate is probably slower than expected. It is mainly affected by the uncertainty of overseas Russia Ukraine conflict. The continuous rise of international crude oil and non-ferrous metal prices will cause obvious and continuous disturbance to China’s industrial product prices.
Risk tip: global inflation is rising too fast; Liquidity flows back to US debt; The global covid-19 epidemic has expanded its impact.
