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CPI increased month on month, and the trend of food and non food prices differentiated. In February, food prices continued to fall year-on-year, but the rise of non food prices had a certain pull on CPI. The year-on-year increase of CPI was the same as that of the previous month, 0.9%, in line with expectations. Affected by the sufficient supply of pork and the weakening of consumer demand after the festival, food prices fell by 3.9% year-on-year in February, an increase of 0.1 percentage points over the previous month, affecting the decline of CPI by about 0.76 percentage points; Non food prices rose by 2.1%, up 0.1 percentage points from the previous month, affecting the CPI to rise by about 1.68 percentage points. International crude oil prices continued to rise due to geopolitical upgrading. China’s industrial consumer goods prices rose by 3.1%, up 0.6 percentage points, including gasoline and diesel prices; Service prices rose by 1.2%, but under the influence of the gradual elimination of the Spring Festival effect and the scattered outbreak of the epidemic in many places, the increase was 0.5 percentage points lower than that of the previous month. The prices of the seven categories rose year-on-year. Except that the year-on-year increase of education, culture and entertainment narrowed by 0.4 percentage points, and housing and medical care were the same as last month, the year-on-year increase of the other four categories expanded. Among them, the rise in oil prices led to the year-on-year increase of fuel for transportation by 3.2 percentage points to 23.4%; Under the influence of holiday factors, the prices of air tickets and tourism increased by 18.0% and 4.5% respectively, but the increase was lower than that of the previous month due to the reduction of travel after the scattered epidemic; The prices of education services and medical services rose by 2.7% and 0.9% respectively, the same as last month. On a month on month basis, CPI rose by 0.6%, an increase of 0.2 percentage points over the previous month. Under the influence of the Spring Festival, food prices rose by 1.4%, the same as last month; Affected by the rise of international crude oil prices, the increase of non food prices increased by 0.2 percentage points to 0.4% over the previous month, and the prices of seven categories increased, leveled and decreased month on month. The price of industrial consumer goods increased by 0.8% from the same level last month. The upward price of gasoline, diesel and liquefied petroleum gas led to the increase in the price of fuel for transportation by 3.9 percentage points to 6.1%; Under the influence of the local Chinese new year, the popularity of cultural and entertainment consumption and suburban tourism increased, the prices of film and performance tickets increased by 9.3%, and the prices of other accommodation such as home stay increased by 2.2%; The return of migrant workers to the city after the festival increased the supply of relevant services, and the prices of domestic services and maternal and infant care services decreased by 6.8% and 1.9% respectively. In February, the core CPI excluding food and energy prices rose by 1.1% year-on-year, down 0.1 percentage points from the previous month.
Fresh vegetable prices rose month on month, while pork prices continued to fall. On a year-on-year basis, the price of livestock meat decreased by 26.0% in February, an increase of 0.4 percentage points over the previous month. Driven by Festival factors, the decline in fresh vegetable prices narrowed by 4.0 percentage points to – 0.1%, while the price of fresh fruits fell by 3.3 percentage points to 6.6% year-on-year due to the rise in prices in the same period last year. The supply of pork was still sufficient, with a decrease of 9.5%. On a month on month basis, the prices of food, tobacco and alcohol subcategories fluctuated. Except for the decline in the prices of animal meat, eggs and milk, the prices of the other seven categories increased. The month on month price of livestock and meat decreased by 1.5%, and the decline expanded by 0.7 percentage points, while the decline of pork price expanded by 2.1 percentage points to – 4.6%; The holiday effect superimposed on the increase in transportation costs, and the price of fresh vegetables increased by 6.0% month on month, expanding by 2.9 percentage points. Affected by the high base last year, the price increase of fresh fruits narrowed by 4.2 percentage points to 3%. At the end of February, the national development and Reform Commission said that it would immediately start the collection and storage of central frozen pork reserves with relevant departments and guide all localities to actively collect and store. The first two bidding transactions for the collection and storage of central frozen pork reserves in 2022 totaled about 78000 tons. In March, high-frequency data showed that the prices of 28 key monitored vegetables rose year-on-year, and the year-on-year decline of pork prices narrowed, Food CPI is expected to pick up moderately in March.
PPI changed from decline to rise month on month, and the prices of crude oil and nonferrous metals related industries rose. On a month on month basis, affected by the rise in the prices of crude oil, non-ferrous metals and other international commodities, PPI increased by 0.5% from a decrease of 0.2% in February. Among them, the price of means of production changed from a decrease of 0.2% to an increase of 0.7%; The price of means of living changed from flat to 0.1% month on month, and the rebound of upstream prices was transmitted to the downstream. From the perspective of industry, the price trend of different industries continues to differentiate, the effect of the policy of ensuring supply and stabilizing price continues to appear, the superimposed weather has warmed up, and the coal price continues to fall; The conflict between Russia and Ukraine has further escalated, and the prices of international crude oil and non-ferrous metals have risen, driving the prices of Petrochina Company Limited(601857) , non-ferrous metals related industries to rise; The resumption of work and production after the festival has accelerated, and the price of steel has also increased; Electricity and heat prices continued to rise. On a year-on-year basis, PPI rose by 8.8% in February, down 0.3 percentage points from the previous month, but slightly higher than expected. Among them, the price of means of production increased by 11.4%, and the increase continued to fall by 0.4 percentage points; The price of means of subsistence increased by 0.9%, and the increase fell by 0.1 percentage points. Among the 40 industrial categories surveyed, prices rose in 36, the same as last month. Among the major industries, coal mining and washing industry saw the biggest decline in price increase, followed by chemical fiber manufacturing industry, followed by ferrous metal smelting and calendering processing industry, chemical raw materials and chemical products manufacturing industry, with the increase and decline rate of more than 1 percentage point; The largest price increase was in the oil and gas exploration industry, with an increase of 3.7 percentage points. In March, the South China industrial products index continued to rise. Stimulated by the geopolitical upgrading of Russia and Ukraine and the increase of sanctions against Russia by western countries, the market was more worried that the crude oil and non-ferrous metal products produced by Russia could not be exported, which continued to push up the international commodity prices. In terms of crude oil, OPEC + still decided to increase the oil production in April by 400000 barrels / day according to the original plan. In the short term, the international crude oil supply and demand is still tight, the price remains high and volatile, the medium and long-term global supply will gradually recover, and the crude oil price may gradually fall back to the normal range; In terms of non-ferrous metals, with the acceleration of the steady growth of China’s infrastructure, the consumer demand for non-ferrous metals may increase gradually, and the price may fluctuate at a high level in the short term. In late February, the national development and Reform Commission and relevant departments held relevant meetings on the price stability of coal, iron ore and other bulk commodities for many times to crack down on illegal acts such as fabricating and disseminating price increase information, hoarding and hoarding, driving up prices, and strive to stabilize market prices. In March, the national development and Reform Commission said at a press conference that it would continue to do a good job in ensuring supply and price stability of grain, energy and mineral products this year, and relevant measures would be implemented later or successively to maintain price stability. The base number gradually rose last year, but geopolitical factors were uncertain. It is expected that the year-on-year growth rate of industrial producer prices in March will be relatively stable.
CPI is expected to rise moderately and PPI may maintain a stable trend. We need to pay attention to the trend impact brought by overseas factors. In February, the scissors difference between CPI and PPI continued to converge, falling to 7.9 percentage points from 8.2 percentage points last month. In terms of CPI, in the year-on-year increase of 0.9% in February, the tail warping impact of price changes last year was about – 0.1 percentage points, and the impact of new price increases was about 1.0 percentage points. Pork purchasing and storage work has been gradually started, with the increase of transportation costs, food prices may rise, and the rise of international crude oil prices may continue to expand the rise of non food prices. It is expected that CPI may return to the “1” era in March. In terms of PPI, in the year-on-year increase of 8.8% in February, the tail warping impact of price changes last year was about 8.4 percentage points, and the impact of new price increases was about 0.4 percentage points. The effect of the policy of ensuring supply and price stability continues to be released, but the steady growth policy in terms of construction and infrastructure after the festival may drive the demand for steel, building materials and other products. Superimposed on the high fluctuation of international energy, nonferrous metals and other bulk commodity prices affected by geopolitics, coupled with the obvious rise of the base, PPI is expected to maintain a stable trend in March, However, if the risk of Russia and Ukraine exceeds expectations, it may have a trend impact on the price side.
Risk tip: crude oil price fluctuates sharply and the demand is lower than expected.
