In March, PPI increased by 8.3% (the previous value was 8.8%) year-on-year and continued to fall year-on-year, with a month on month increase of 1.1% (the previous value was 0.5%), an increase of 0.6 percentage points over the previous month, slightly exceeding market expectations. In March, China’s CPI rose 1.5% year-on-year, the previous value was 0.9%, and the increase expanded by 0.6 percentage points, which was flat month on month. In terms of sub items, non food items increased slightly due to the impact of crude oil and other prices, with a year-on-year increase of 2.2% (the previous value was 2.1%). Affected by the epidemic situation in many places, the supply and output are in short supply, and the price of fresh vegetables drives up the food items. Food items rose by – 1.5% (previous value – 3.9%) year-on-year in the same month, and the decline narrowed by 2.4%.
In the medium term, China’s supply and price stability and overseas inflation control are still the primary objectives, that is, the downward trend of inflation is determined, and the year-on-year decline of means of production has become the main reason for the year-on-year decline of PPI. The means of production increased by 10.7% year-on-year in March (the previous value was 11.4%), and the means of living increased by 0.9% year-on-year in the same month, which was the same as that of the previous month.
In the short term, geopolitical factors such as the Russian Ukrainian war at the overseas end have pushed the prices of international crude oil, nonferrous metals and other commodities to continue to rise. At the Chinese end, the epidemic has repeatedly continued to affect the rise in the prices of raw materials at the upstream of the supply chain. In March, PPI rose by 1.1% (the previous value was 0.5%) month on month, an increase of 0.6 percentage points over the previous month. Among them, the means of production increased by 1.4% (the previous value was 0.7%) month on month, and the breakdown of means of production increased to varying degrees, among which the mining industry and raw material industry increased significantly month on month.
In March, China’s CPI was flat month on month, with a year-on-year increase of 1.5%, the previous value of 0.9%, and the increase increased by 0.6 percentage points. The short-term epidemic is the main influencing factor. Food items were – 1.5% year-on-year in the same month, with a decrease of 2.4% compared with the previous month, and the rise in fresh vegetable prices was the main reason. Among them, the output and supply of vegetables in many places affected by the epidemic tightened. Fresh vegetables increased by 17.2% (former value – 0.1%) year-on-year in the current month and 17.3% compared with the previous month, which became the main reason for the rise of CPI food items. Eggs took root by 7% (former value 2.6%) year-on-year in the current month and pork increased by – 41.4% (former value – 42.5%) year-on-year in the current month, which continued to drag down the rise of CPI. Non food items rose by 2.2% year-on-year in the same month (the previous value was 2.1%), slightly higher than that of the previous month. Geopolitics continued to affect the rise in the prices of gasoline, diesel and liquefied petroleum gas in China. Transportation and communication increased by 5.8% year-on-year in the same month, which was the main reason for pulling up non food items.
In March, the scissors difference between PPI and CPI was 6.8% (the previous value was 7.9%), which continued to fall from the high of 13.5% in October last year, but it was still at a relatively high level in history, and the subsequent high probability continued to converge.
Risk tips: unexpected macroeconomic changes, intensity of demand recovery, secondary epidemic outbreak and vaccine progress, etc.
