Under the disturbance of the epidemic, the short-term CPI still tends to rise. The rise of international Shenzhen Agricultural Products Group Co.Ltd(000061) prices and the interference of China’s epidemic to the logistics and transportation of food materials have driven the food prices higher than the seasonality month on month. However, the rise of international energy prices has still expanded the price increase of industrial consumer goods in non food. Since April, under the influence of frequent purchase and storage, the decline of pork prices has narrowed significantly. The logistics obstruction caused by the epidemic has still led to the rise of food prices such as fresh vegetables, fresh fruits and eggs. We expect CPI to rise significantly year-on-year in the short term. Higher oil prices push up PPI growth and guard against upward pressure on costs. On the one hand, driven by the higher commodity prices priced globally, the prices of oil and non-ferrous metal related industries continued to rise. On the other hand, higher energy prices have led to a month on month rise in China’s priced coal prices and an increase in steel prices, which means that the problem of high raw material costs will continue, and the price increase in the downstream agricultural and sideline food processing industry will expand month on month. Recently, the Premier held the national standing committee meeting and the Symposium of economic situation experts and entrepreneurs, which said that stabilizing prices is one of the important contents of steady growth. We expect that the measures to ensure supply and stabilize prices will continue to be promoted, and the upward risk of prices throughout the year is still controllable.
In March, the year-on-year growth rate of CPI jumped. The year-on-year growth rate of CPI in March was 1.5%, 0.6 percentage points higher than that in February. The year-on-year growth rate of core CPI after deducting food and energy prices was 1.1%, which was the same as that of the previous month. Among the year-on-year increase of 1.5 percentage points in March, the new price increase factor contributed about 1.1 percentage points. On the one hand, the year-on-year growth rate of food prices narrowed significantly, including the year-on-year rise of pig prices, the year-on-year change of vegetable prices from negative to positive, and the rise of flour prices expanded; On the other hand, the rise in international energy prices has driven the year-on-year increase in the prices of industrial consumer goods in non food industries to continue to expand.
In March, the month on month growth rate of CPI returned to zero. In March, the month on month growth rate of CPI returned to zero and reached a new high in the same period since 13 years. From the perspective of month on month growth, food prices changed seasonally from up to down, recording – 1.2%. Among them, due to the decline of consumer demand and sufficient supply after the festival, the month on month decline of pork expanded, and the month on month decline of fresh fruits and aquatic products changed from up to down. Affected by the rising prices of international wheat, corn and soybeans and the epidemic in China, the prices of flour, edible vegetable oil, fresh vegetables and eggs increased by 1.7%, 0.6%, 0.4% and 0.3% respectively, which narrowed the month on month decline of food prices compared with the average in the same period of the past five years. The month on month increase in non food prices fell, mainly due to the impact of the decline in service prices, the decline in demand after the festival and the impact of the epidemic. Air tickets, film and performance tickets, transportation rental fees and tourism prices fell by 10.0%, 7.6%, 3.5% and 2.6% respectively. Driven by the rise in energy prices, the rise in the price of industrial consumer goods continued to expand.
It is predicted that the year-on-year growth rate of CPI will continue to rise in April. From the perspective of high-frequency data, since April, the month on month decline of pork price has narrowed significantly, the fruit price has changed from decline to rise, the month on month increase of egg price has expanded, the month on month increase of fresh vegetable price has fallen, and the crude oil price has declined. It is expected that the CPI will turn positive month on month in April, and the year-on-year growth rate will continue to rise.
In March, the year-on-year growth rate of PPI continued to decline. In March, the year-on-year growth rate of PPI decreased to 8.3%, down 0.5 percentage points from the previous month. Among them, the price increase of means of production continued to fall, while the price increase of means of living was the same as that of the previous month. The tail raising factor of last year’s price change is still the main contribution to the year-on-year rise of PPI this month, but the contribution of new price factors has increased, from 5% last month to 18%. By industry, 37 of the 40 industrial sectors saw year-on-year increases in prices, with an increase of one over the previous month. Among them, the year-on-year increases in energy prices such as coal mining and washing, oil and gas mining, oil, coal and other fuel processing, and power and heat production and supply increased; The price increase of nonferrous metals, steel, chemical industry, chemical fiber and other industries fell.
The month on month growth of PPI expanded in March. In March, PPI rose by 1.1% month on month, an increase of 0.6 percentage points over the previous month, confirming that the purchase price index and ex factory price index of PMI raw materials continued to rise in March. Among them, geopolitics and other factors promote the continuous rise of international commodity prices, driving the prices of Petrochina Company Limited(601857) , non-ferrous metals and other related industries to continue to rise. Oil and gas exploitation, petroleum, coal and other fuel processing, chemical fiber, chemical industry and non-ferrous metals industries together contribute 70% of the month on month increase of PPI. China’s coal price has changed from lower to higher month on month, the increase of steel price has expanded, and the price increase of agricultural and sideline food processing, wine, beverage and tea industries in consumer goods manufacturing has also increased.
It is predicted that PPI will slow down year-on-year in April. From the perspective of high-frequency data, the international oil price has fallen since April, the trend of China’s coal price has been differentiated, the steel price has risen, and the month on month increase of PPI may fall. Considering the continuous rise of the base in the same period last year, the year-on-year growth rate of PPI in April slowed down steadily.
Risk tip: policy changes, economic recovery is less than expected.
