CPI in March was 1.5% year-on-year, expected to be 1.2%, and the previous value was 0.9%; PPI was 8.3% year-on-year, expected to be 7.8%, and the previous value was 8.8%.
CPI rebounded more than expected, and the epidemic may be the main reason for restricting the logistics supply chain. In March, CPI rebounded year-on-year than expected, with an increase of 0.6 percentage points compared with February. In terms of food items, in March, CPI pork fell by 41.4%, affecting the CPI decline by about 0.83 percentage points, which is the largest drag on CPI. CPI pork fell by 9.3% month on month, mainly affected by factors such as falling consumer demand and sufficient supply after the festival. In addition, the prices of fresh vegetables and eggs rose by 0.4% and 0.3% month on month respectively, both of which were significantly ahead of the seasonality, or reflected the negative impact of logistics obstruction on food supply. In terms of non food items, CPI transportation and communication increased by 5.8% year-on-year and 1.6% month on month, both of which were the largest driving items of CPI in March.
With the increase of the base, the year-on-year growth rate of PPI continued to fall; However, the price rise effect is still, and PPI is stronger month on month. In March, PPI rose by 8.3% year-on-year and the previous value was 8.8%, which has fallen for five consecutive months; Rose 1.1% month on month, rising again compared with the previous month, mainly because the conflict between Russia and Ukraine continued to impact international commodity prices in March, and the upstream industrial chain became the core factor driving the rise of PPI month on month. Among them, the price of means of production increased by 10.7% year-on-year, driving PPI up by 8.1% year-on-year and 1.4% month on month; The price of means of living rose by 0.9%, driving PPI up by 0.2% and 0.2% month on month.
Corn prices may be affected by spring ploughing, and short-term pig prices are still under pressure. On the one hand, the northeast region seriously affected by the epidemic is the main producing area of corn. In 2020, its corn output accounted for more than 40% of the country, 14.0% in Heilongjiang, 11.4% in Jilin, 10.5% in Inner Mongolia and 6.9% in Liaoning. According to the Muyuan Foods Co.Ltd(002714) open formula, corn accounts for 56.7% of the cost of pig feed. Although Jilin Province has started the protection measures for the progress of spring farming, it is still necessary to pay attention to the impact of the progress of spring farming on grain prices and pig prices in the future. On the other hand, in the short term, the pig price is still under pressure. Once the short-term price increase expectation driven by collection and storage is different from the reality of large-scale breeding enterprises, there may be centralized selling, which will drive the price to continue to fall. Therefore, it is difficult for the short-term pig price to rise significantly.
The supply chain is blocked or increases the upward risk of CPI; Geographical uncertainty may still support PPI to remain high. Under the current circumstances, the rising cost and the convergence of the negative contribution of pork prices have made the CPI moderately higher, but the obstruction of China’s supply chain caused by the epidemic may become a new variable to push up the inflation level in the future. We are reporting on the current situation of supply chains outside China and its impact It is pointed out that if the national epidemic fails to appear an inflection point in the short term, it will further restrict China’s logistics supply chain and aggravate the upward risk of CPI year-on-year. In terms of PPI, the global supply chain has improved this year, but at present, the interpretation of the international situation such as the conflict between Russia and Ukraine is complex and changeable. The short-term commodity prices such as crude oil may remain high and volatile, and the decline slope of subsequent PPI may slow down.
Risk tip: the impact of the epidemic on China’s supply chain exceeded expectations; Changes in the international situation exceeded expectations
