CPI will gradually rise in the future, inflation will rise this month, and core CPI will remain stable. Food prices fell while non food prices rose: (1) in terms of food, the average price of vegetables did not decline too much after, which was affected by weather, epidemic situation and logistics; The demand for live pigs fell rapidly after the Spring Festival, the pork market was higher than the demand, the pork price fell, and the market supply was still relatively sufficient; In terms of food, the price of fresh fruits of aquatic products fell and the price of grain and oil rose; (2) In terms of the price of crude oil, the price of non fuel is affected by the upward trend of 1.7%; Service prices declined slightly as a whole.
The inflation expectation of the whole year is upward, and the tail warping in April 2022 will affect 1.8%. It is expected that the new price increase factors will rise slightly, and the year-on-year growth rate of CPI is about 2.0%. It is estimated that the annual CPI growth rate will be 2.2% – 2.4% in 2022, and the CPI level may reach about 2.7% in 2023. The annual inflation expectation is upward: (1) the upward inflation is partly caused by logistics interruption; (2) Global logistics reshuffle planning, the rise of commodity prices.
“Stagflation” is beginning to appear, the downward pressure on the economy is greater, and the upward inflation suppresses the economy in terms of social consumption, industrial production profits and monetary policy. At the same time, there is great economic pressure: (1) covid-19 epidemic prevention and control has severely damaged the service industry and weak terminal demand in China; (2) Downstream industries can not raise prices smoothly, and the price rise that consumers can bear is limited; (3) The contraction of demand under the tightening of global currency and the transfer of orders under the strict control of China’s epidemic will bring about the decline of overseas demand; (4) Steady growth measures are still insufficient, and the liquidation of the real estate industry has not been completed.
With the cooperation of fiscal and monetary policies, the monetary choice of the central bank is particularly difficult. When the wide credit channel is blocked, the monetary easing effect of the central bank is less than expected. The central bank is also cautious in tightening the external monetary market under loose conditions. In the “stagflation” environment, fiscal policy can better ensure economic operation than monetary policy. At present, fiscal policy only focuses on infrastructure. The direct assistance to small and medium-sized enterprises has not been launched, and the assistance to consumers has not been discussed. If the pig cycle rebounds slowly in the second half of the year, inflation may be in a moderate upward trend, and monetary policy is more promising in the second half of the year.
PPI will gradually fall back in the future. In March, PPI rose month on month, the price of upstream raw materials rose sharply, the ex factory price of goods in the black industrial chain rose, the price of crude oil rose sharply, and the prices of related products in its industrial chain rose: (1) the rise of international crude oil prices led to the rise of Petrochina Company Limited(601857) and related industrial prices; (2) Affected by the tight international energy prices and the need for steady growth, China’s coal prices rose again; (3) Consumer industries continued to pick up.
The base level in April is expected to be the same as that in March, with a slight decline month on month. China’s PPI fell in April: (1) energy prices are at a high level, but fell to a certain extent; (2) Under the epidemic prevention and control, the factory started to decline, and the measures to stabilize growth were delayed, resulting in the decline of factory prices; (3) The easing of logistics congestion reflects the decline of BDI dominated by bulk commodity transportation, which indicates that the month on month increase of PPI will weaken in the future.
PPI is expected to fall month on month in April, and the PPI level in April is about 7.3%. In 2022, PPI is expected to be around 6% in the whole year. Affected by the base, PPI is a low point in the fourth quarter.
