In February 2022, CPI increased by 0.9% year-on-year, unchanged from the previous value of 0.9%. PPI increased by 8.8% year-on-year, with the former value of 9.1%; PPI increased by 0.5% month on month, with the previous value of – 0.2%. PPI changed from negative to positive month on month, and the year-on-year increase decreased; CPI remained stable year-on-year.
I. CPI: the decline in pork prices continues to drag down growth
The year-on-year growth rate of CPI was the same as that of the previous month, with a slight increase month on month. In February, the year-on-year growth rate of CPI was the same as that of the previous month, which was 0.9%, and the month on month growth rate expanded from 0.4% to 0.6%. In the 0.9% year-on-year increase of CPI, the tail warping factor last year affected about -0.1pct, and the new price rise factor this year affected 1.0pct.
In terms of food prices, the continuous decline of pork prices continues to expand the drag on CPI. Food prices fell by 3.9% year-on-year in February, an increase of 0.1pct over the previous month, driving CPI down by about 0.76pct. Among them, the price of pork is still in the downward channel, with the price falling by 42.5pct, driving the CPI down by about 0.95pct, while the prices of fresh fruits and aquatic products increased by 6.6% and 4.9% respectively, driving the CPI up by 0.13pct and 0.10pct. At present, the supply of pork is still surplus and the price continues to decline. At the end of January, the number of fertile sows was 42.9 million. It is expected that pork prices will turn an inflection point in May and June this year, opening a new round of pig cycle, and the impact on CPI in the second half of the year will change from drag to pull upward.
Non food prices were relatively stable, with a year-on-year increase of 2.1pct in February, an increase of 0.1pct over the previous month, driving the CPI to rise by 1.68pct, basically the same as the previous month. Affected by the recent rise in energy prices, the price of industrial consumer goods rose by 3.1%, an increase of 0.6pct over the previous month, of which the prices of gasoline and diesel increased by 23.9% and 26.3% respectively, an increase of some extent over the previous month. The service industry has been repeatedly disturbed by the epidemic and its recovery is limited. Service prices rose by 1.2%, down 0.5pct from the previous month.
Looking ahead, pork prices will still suppress CPI in the first half of this year, and the year-on-year growth rate of CPI will remain low. In the second half of the year, with the opening of a new round of pig cycle, CPI will rise moderately. At present, the impact of the impact of oil price on CPI is relatively limited, and it is expected that the center will only move up slightly during the year. Whether lard resonance will be formed in the second half of the year remains to be seen.
II. PPI: the rise of oil price pushed up the chain from negative to positive, and the year-on-year decline slowed down
The month on month growth rate of PPI changed from negative to positive; The year-on-year growth rate fell, and the downward trend slowed down. In February 2022, the month on month growth rate of PPI increased to 0.5pct from – 0.2pct last month, and the year-on-year growth rate decreased by 0.3pct to 8.8% compared with the previous value.
Recently, affected by the situation in Russia and Ukraine, the prices of internationally priced commodities such as crude oil and nonferrous metals have risen rapidly, driving the prices of Petrochina Company Limited(601857) related industries to rise, forming strong support for PPI, driving PPI to rebound month on month and slowing down year-on-year downward trend. The price of means of production rose by 11.4% year-on-year and fell by 0.4pct, driving the PPI to rise by about 8.56pct year-on-year. Combing along the oil industry chain, the upstream oil and gas exploitation industry increased by 41.9pct year-on-year, expanding by 3.7pct compared with the previous month; The oil and coal fuel processing industry rose 30.2pct, an increase of 0.1pct over the previous month; The midstream chemical raw material manufacturing industry rose 19.7%, down 1.3pct from the previous month; Chemical fiber manufacturing rose 11.4%, down 2.7pct from the previous month. In addition, the non-ferrous metal smelting and processing industry rose by 20.4pct, an increase of 0.6pct over the previous month.
On the other hand, in the context of the policy of ensuring supply and price stability, the prices of Chinese priced commodities such as coal continued to fall, and the coal mining industry and coal processing industry decreased by 2.4% month on month; The coal mining industry rose 45.5% year-on-year and fell 5.9pct, which weakened the pull on PPI.
The year-on-year growth rate of means of subsistence remained stable, and the prices of various industrial products increased slightly year-on-year. In February, the price of means of subsistence increased by 0.9% year-on-year, an increase of 0.1pct compared with the previous month, driving the year-on-year growth rate of PPI by 0.21pct, which was basically the same as that of the previous month. Among them, the year-on-year growth rate of industrial food was 0.5pct, and the year-on-year growth rate of clothing was 1.4%, which was the same as that of the previous month. The year-on-year growth rates of general daily necessities and durable consumer goods were 1.5% and 0.7% respectively, up slightly from the previous month.
In the year-on-year increase of 8.8%, the tail raising factor contributed 8.4pct last year, and the new price rise factor this year affected about 0.4pct. As the tail raising factor is still dominant, even considering the impact of the conflict between Russia and Ukraine on oil prices, PPI is expected to maintain a downward trend this year.
Looking ahead, the recent high volatility of international oil and non-ferrous metals will further affect the prices of industrial products in China. We expect the downward trend of year-on-year growth of PPI to slow down, and the center may move up by 1 to 2 percentage points during the year.
