Event: China's CPI rose 1.5% year-on-year in March, with an expected 1.3% and a previous value of 0.9%; PPI rose 8.3% year-on-year, expected to be 8.1%, and the previous value was 8.8%.
Comments:
1. Overseas geopolitics led to strong commodity prices in March, and the month on month increase of PPI expanded, but the base effect pushed PPI down year-on-year. The short-term impact of overseas Geopolitics on commodity prices has been reflected. It is expected that the month on month and year-on-year increase of PPI in April will fall significantly. Due to overseas geopolitics, the prices of energy, chemical industry, Shenzhen Agricultural Products Group Co.Ltd(000061) and other bulk commodities rose significantly. PPI rose 1.1% month on month in March, an increase of 0.6 percentage points compared with February. Due to the high base in the same period last year, PPI fell by 0.5 percentage points to 8.3% year-on-year in March. The short-term impact of overseas Geopolitics on commodity prices has been reflected. Since mid and late March, commodity prices have fluctuated at an overall high level. In the environment of high inflation in the United States and Europe, it is expected that commodity prices will still be supported and remain volatile in the short term. The month on month increase of PPI in April fell significantly; Considering the high base of last year, PPI is expected to continue to fall year-on-year.
2. Due to the rise of some Shenzhen Agricultural Products Group Co.Ltd(000061) prices caused by overseas geopolitics and the inhibition of China's epidemic on supply and logistics, the CPI in March was slightly higher than expected. It is expected that the base effect of pig price from April to June will gradually increase CPI by about 0.8 percentage points year-on-year. CPI in March was flat month on month, stronger than seasonal performance. In terms of sub items, food fell by 1.2% month on month, but stronger than seasonal performance; Non food rose 0.3%, also showing strong performance. The decline in food prices is mainly due to the seasonal decline in the demand for pork and aquatic products and the seasonal decline in prices after the Spring Festival; However, due to the rise of some Shenzhen Agricultural Products Group Co.Ltd(000061) prices caused by overseas geopolitics, CPI grain and edible oil rose by 0.5% and 0.4% month on month respectively in March; China's epidemic has led to tight food supply in some regions and pushed up logistics costs. In March, CPI fresh vegetable prices rose by 0.4% month on month. The strong increase in CPI non food prices is also related to the overseas geopolitical impact. In March, CPI transportation and communication increased by 1.6% month on month, mainly due to the rise of international crude oil prices. On April 7, the Ministry of transport held a meeting on the coordination mechanism of logistics support to deploy and implement the work of ensuring the smooth transportation of freight logistics. It is expected that the impact of China's epidemic on logistics will be gradually reduced. The short-term impact of overseas Geopolitics on bulk Shenzhen Agricultural Products Group Co.Ltd(000061) prices has been reflected, and the medium and long-term impact is still uncertain. China's staple grain is basically self-sufficient, and the main bulk imports Shenzhen Agricultural Products Group Co.Ltd(000061) are soybeans, palm oil and other varieties. The overall external dependence is not high. Therefore, China's grain and oil prices are not affected by international Shenzhen Agricultural Products Group Co.Ltd(000061) prices. In the short term, the impact of overseas Geopolitics on China's Shenzhen Agricultural Products Group Co.Ltd(000061) price may have been largely reflected. Even if there is transmission in the future, the impact is limited. Considering the base effect of pig price from April to June last year, CPI is expected to gradually rise by about 0.8 percentage points year-on-year.
Risk tip: Overseas geopolitical uncertainty increases, and price increases are transmitted from upstream to downstream
