Event: according to the data of the National Bureau of statistics, the CPI in March 2022 was 1.5% year-on-year, the previous value was 0.9%, and the same period last year was 0.4%. In March, the PPI was 8.3% year-on-year, the previous value was 8.8%, and the same period last year was 4.4%
The brief comments are as follows:
I. The year-on-year increase of CPI in March was 0.6 percentage points higher than that of the previous month, reaching 1.5%, but it is still at a low level. From the price trend of major commodities in the current month, the prices of food and services decreased compared with February, which is in line with the seasonal law after the Spring Festival. However, food prices in March fell by only 1.2% compared with February, which was significantly lower than that in previous years, which directly led to a significant year-on-year decline in food prices in March, from - 3.9% last month to - 1.5%, and became the main reason for pushing up the CPI increase in March. Among them, the super seasonal rise in vegetable prices in March led to a significant year-on-year increase to 17.2% (compared with - 0.1% last month), which was the main reason for pushing up food CPI and even the overall consumer price increase. In terms of pork, farmers continued to throw their hurdles recently, and pork prices continued to decline in March. However, under the background of faster downward price base in the same period of last year, the year-on-year decline in pork prices in March narrowed slightly.
Another reason that pushed up CPI in March was that the rise in international oil prices led to the rise in fuel prices in China. Gasoline, diesel and LPG prices rose 7.2%, 7.8% and 6.9% month on month, respectively, while year-on-year increases expanded to 24.6%, 26.9% and 27.1% respectively. This led to a 3.5% rise in the price of industrial consumer goods in March, an increase of 0.4 percentage points over the previous month.
It is worth mentioning that affected by the escalation of the international geopolitical situation, the prices of international wheat and corn rose rapidly in March, and the price of Chinese flour rose by 1.7% month on month and 4.6% year-on-year. This led to a year-on-year increase of 2.0% in China's grain prices in March, an increase of 0.5 percentage points over the previous month. However, under the background of China's high self-sufficiency rate of staple grain and the price of wheat and corn in China is much higher than the international price, the possibility of significant rise in China's grain price in the future can be basically ruled out. In March, the core CPI excluding food and energy prices continued to remain stable, with a year-on-year increase of 1.1%, which was the same as that in February, which was significantly biased to the level. This means that the overall price situation in China remains stable.
The recent CPI increase is significantly low, on the one hand, because the "pig cycle" is in the second half of the price decline, on the other hand, it is also a reflection of the current sluggish consumption. At the same time, it is also related to the fact that China's monetary and fiscal policies have not been flooded after the outbreak of the epidemic in 2020.
Looking forward to April, with the increase in purchasing and storage, pork prices have basically stabilized at the bottom. In addition, the base of last year is down, and the year-on-year decline in pork prices in April will be further narrowed; Meanwhile, the year-on-year increase in vegetable prices in April will further expand. Affected by this, the decline in food prices in April will continue to narrow. In addition, the recent rise in international oil prices has eased, and consumer demand has been greatly affected by China's epidemic. Therefore, we expect that CPI in April will maintain a slight year-on-year recovery trend, which is expected to reach 1.7%. Considering the overall mild price situation, price factors will not restrict the flexible adjustment and timely strengthening of China's monetary policy.
II. In March, the international crude oil price soared sharply, but under the background of the obvious rise of the price base of the previous year, the year-on-year increase of PPI fell to 8.3%. Affected by the warming of the international geopolitical situation, the prices of international bulk commodities such as international crude oil and some non-ferrous metals have risen rapidly recently. PPI rose 1.1% month on month, an increase of 0.6 percentage points over the previous month. However, under the background of the obvious rise of the price base in the same period of last year - the PPI in February 2021 was 1.7% year-on-year, rose rapidly to 4.4% in March, and the year-on-year increase of PPI in March fell for the fifth consecutive month, indicating that the price pressure of upstream industrial raw materials has eased on the whole. In terms of classification, driven by the policy of guaranteed supply and stable price, the year-on-year increase in the prices of industrial products such as steel, chemical industry and non-ferrous metals dominated by China has dropped; In March, crude oil, natural gas and coal prices increased year-on-year. The former was mainly driven by the rise of international crude oil prices, and the latter was mainly due to the supplementary rise of coal spot prices in late March after the rapid rise of coal futures prices in the early stage. In addition, it is worth noting that under the effect of slow consumption, the price of downstream industrial means of living rose only 0.9% year-on-year in March, the same as that of the previous month.
Looking forward to the future, the boosting effect of the Russian Ukrainian war on international oil prices has entered a phased decline stage. In addition, China's steel and coal production capacity has accelerated, and the price base of last year has further increased. PPI is expected to fall to about 7.0% year-on-year in April. On the one hand, it shows that the price pressure of upstream raw materials will continue to ease in the future, but it also means that PPI will still be significantly high year-on-year in the short term. We judge that in order to alleviate the cost pressure and stabilize the job market, the targeted support policies such as tax reduction and fee reduction and financial support for small and micro enterprises in the middle and lower reaches will continue to increase in the later stage, which is particularly necessary under the background of further increasing downward pressure on the economy.
