Event:
1) CPI was 1.5% year-on-year, the previous value was 0.9%, and the market expectation was 1.3%; CPI was 0.0% month on month, with the previous value of 0.6%;
2) core CPI was 1.1% year-on-year, and the previous value was 1.1%;
3) PPI was 8.3% year-on-year, the previous value was 8.8%, and the market expectation was 8.1%; PPI was 1.1% month on month, with the previous value of 0.5%.
Core view:
The price data in March was mainly affected by the dual factors of the epidemic situation in China and the conflict between Russia and Ukraine abroad. On the one hand, the epidemic caused some food prices to be higher than the seasonality, coupled with the rise in oil prices, which promoted the year-on-year increase of CPI; On the other hand, the conflict between Russia and Ukraine continued, and the imported inflation pressure led to the rise of China's energy and chemical prices, which restricted the downward speed of PPI year-on-year growth.
Looking ahead, it is expected that the year-on-year trend of CPI in the year will remain low before high. Pig prices are expected to usher in a new round of rising cycle in the second half of the year. There is a risk of breaking 3% around September, but the repeated epidemic may restrict the CPI center in the year. In terms of PPI, under the background of the conflict between Russia and Ukraine in the first half of the year and steady growth in the second half of the year, it is expected that there is little room for the decline of commodity prices, which restricts the decline rate of PPI year-on-year growth, and the cost pressure on the enterprise end is still large.
In March, CPI rose to 1.5% year-on-year from 0.9% last month, which was higher than market expectations.
The disturbance of epidemic situation is the reason why CPI exceeded expectations. At present, the price data in March more reflect the cost side impact caused by the epidemic, while the impact of weak demand has not been reflected.
On the one hand, due to the blockade of some areas, the supply chain is not smooth and the supply and demand are unbalanced. The prices of some foods such as fresh vegetables and eggs rise, which deviates from the seasonal trend. Among the food items in March, the prices of fresh vegetables and eggs were 0.4% and 0.3% month on month, higher than the seasonal average of - 7.0% and - 3.5% (using the average of the same period in 2014, 2017, 2019 and 2020).
On the other hand, due to the tightening of epidemic control around the country, which generally appeared after late March, the service industry was relatively less affected in March. It is expected that the drag of the epidemic on the service industry may be further reflected at the price level in April. At the same time, due to the continuous high level of upstream raw materials and the rigid pressure on the cost side, it is also difficult for the price of consumer goods to fall.
The month on month growth of PPI expanded again in March, but driven by the high base, the year-on-year growth rate of PPI still maintained a downward trend.
The conflict between Russia and Ukraine led to the rise of China's energy and chemical prices, which was the main reason for the expansion of PPI month on month growth. In addition, due to the rise of overseas coal prices and the widening of coal price difference outside China, the number of China's coal imports decreased, driving the rise of China's coal prices. However, under the main tone of ensuring supply and stabilizing prices, the rise was relatively mild.
Recently, as the United States and Europe increased the investment of strategic oil reserves to alleviate the rising pressure of oil prices, oil prices have continued to fall since the end of March. However, considering that the conflict between Russia and Ukraine has not ended, the risk of sanctions is still there, and the oil price is still in a high fluctuation environment in the first half of the year, which continues to restrict the downward speed of PPI year-on-year growth in the second quarter. In the second half of the year, with the steady growth effect gradually emerging, it is expected that China's commodity prices will also face upward pressure.
Inflation transmission continues, but the differentiation between industries is more serious. From the perspective of the structure of PPI means of living in March, the price increase of food and daily necessities with stable demand has expanded, and the price is still increasing; Affected by the epidemic and other factors, the prices of clothing and durable goods with slow demand recovery were flat or fell last month, and the range of price increase was limited. Among them, the prices of food and daily necessities increased by 0.5% and 0.4% month on month, both higher than 0.2% of the previous month; Clothing prices fell by 0.2% month on month and 0.1% last month; Durable goods prices were 0% month on month and - 0.1% last month.
Risk warning: the international oil price is higher than expected; Covid-19 pneumonia spread on a large scale.
