According to the data of the National Bureau of statistics, in March 2022, CPI increased by 1.5% year-on-year and remained unchanged month on month; PPI rose 8.3% year-on-year and 1.1% month on month. The main concerns are as follows:
First, the rise in international food prices combined with the impact of China's epidemic has accelerated the rise of some food prices, and the year-on-year increase of CPI has expanded. Although pork prices fell by 41.4% in March, CPI rose by 1.5% year-on-year, an increase of 0.6 percentage points over the previous month. If the impact of the decline in pork prices is excluded, the year-on-year increase in CPI in March will expand to 2.3%. This is mainly affected by multiple factors: first, affected by the obvious rise in international grain prices, the prices of Chinese flour, edible vegetable oil and other food have risen one after another; Second, the rebound of the epidemic situation in some parts of China has had an impact on the supply and transportation of vegetables, resulting in a significant rise in the prices of fresh vegetables and eggs; Third, the rise in international energy prices such as crude oil has also driven up the prices of industrial consumer goods and transportation and communication. From the perspective of sub structure CPI, in March, the prices of edible oil, fresh vegetables, eggs, transportation and communication in CPI increased by 3.5%, 17.2%, 7% and 5.8% respectively year-on-year. Looking ahead, considering that international food and energy prices are still high and the impact of the epidemic in China will continue, it is expected that CPI will rise slightly or flat month on month in April, and the year-on-year increase will further expand compared with March, about 1.7%.
Second, the further rise in international commodity prices pushed up the price of raw materials in China, and the month on month increase of PPI expanded. In March, PPI rose 8.3% year-on-year, down 0.5 percentage points from the previous month, mainly due to the weakening influence of tail warping factors. From the perspective of month on month, PPI has increased for two consecutive months, and the month on month increase in March was further expanded compared with the previous month. Under the influence of factors such as the escalation of the conflict between Russia and Ukraine, the prices of international bulk commodities such as crude oil and non-ferrous metals have further increased, which continues to push up the prices of raw materials in China. In March, the CRB spot composite index and the average settlement price of Brent crude oil futures increased by 25.83% and 71.17% year-on-year respectively. From the perspective of PPI by industry, the price increase of products in coal mining and washing industry (up 53.9% year-on-year), oil and gas mining industry (up 47.4% year-on-year), petroleum, coal and other fuel processing industry (up 32.8% year-on-year) and other industries showed an expanding trend. Looking forward to the future, considering that the overweight of energy sanctions against Russia by the United States and Europe may lead to the continuous high operation of international oil prices, it is expected that PPI will still rise month on month in March, but under the influence of the weakening of tail raising factors, the year-on-year increase may be the same as that in February, about 8.3%.
Third, we need to pay close attention to the increased risk of imported inflation pressure in the future. In the context of the increasingly complex international situation, global energy and metal prices will remain high, international food prices will face great upward pressure, and the slow recovery of global supply chain will also lead to the continuous increase of comprehensive costs. In the future, the pressure of imported inflation faced by China may continue to increase. This will bring many potential risks to China's economic operation. The rise in the price of raw materials will increase the operating costs of enterprises, face greater challenges to energy security and food security, and the rise in inflation expectations will lead to increased volatility in the financial market. It is suggested to plan ahead, strengthen prevention, focus on steady growth and increase support for the real economy; Strengthen the construction of energy security and food security, appropriately increase the number of national reserves of key commodities, and strengthen the ability to deal with the risk of market fluctuations; Strengthen the linkage supervision of commodity futures and spot markets, investigate abnormal transactions and malicious speculation, and stabilize market expectations; Improve the accuracy of epidemic prevention, strengthen departmental coordination and cooperation, and ensure smooth logistics.
