Core view
In March, CPI was flat month on month, with a year-on-year increase of + 1.5% (the previous value was 0.9%), and CPI rebounded significantly year-on-year. There are three reasons: first, the food price represented by fresh vegetables rose seasonally under the condition of tight stock demand and supply; 2、 Crude oil prices rose sharply, driving up gasoline and diesel prices; 3、 Contribution of tail warping factor. The epidemic situation was severe and the repair of core CPI was blocked. In March, the core CPI was + 1.1% year-on-year, the same as the previous value. Looking ahead, as the epidemic has not yet seen a clear inflection point, the national prevention and control measures have become stricter, and the contradiction between residents' hoarding and tight supply continues to exist. There is still room for CPI food items to rise. It is expected that CPI is expected to rise by about 2% year-on-year in April. In March, PPI rose by + 1.1% month on month and + 8.3% year-on-year (the previous value was 8.8%). Affected by the situation in Ukraine and Russia, crude oil and nonferrous metals prices continued to rise, coal prices rebounded under the tight supply and demand pattern, and the rise of upstream prices strongly supported the month on month rise of PPI.
Fresh vegetable prices rose, and CPI rebounded significantly year-on-year
In March, CPI was flat month on month, with a year-on-year increase of + 1.5% and the previous value of + 0.9%. CPI rebounded significantly year-on-year. There are three reasons: first, the sharp rise in crude oil prices has driven the sharp rise in gasoline and diesel prices. According to the disclosure of the Bureau of statistics, gasoline, diesel and liquefied petroleum gas have affected the CPI to rise by 0.3 percentage points month on month. Second, the recurrence of the epidemic has led to stricter sealing and control measures in many places, and the food prices represented by fresh vegetables have risen seasonally under the condition of tight stock demand and supply. Third, the tail warping factor in March was about 0.4 percentage points, compared with the previous value of - 0.1 percentage points. The tail warping factor is an important reason for the year-on-year increase of CPI. In addition, pork prices continued to bottom, in line with our previous judgment. According to the data of Beijing Xinfadi, the average daily listing of white striped pigs in March decreased significantly compared with that before the festival, indicating that the pork consumption after the Spring Festival is obviously weak.
The epidemic prevention and control is severe, and the repair of core CPI is blocked
In March, there were many, wide-ranging and frequent local epidemic situations in China, which have affected nearly 200 prefecture level cities in China. Under strict prevention and control requirements, the demand for dining out, travel, culture and entertainment was restrained, and some offline aggregation and contact consumption scenes were lost. In the related railway transportation, air transportation, accommodation and catering industries, business activities decreased significantly, and the business activity index decreased by more than 20 percentage points in March. The box office data in March was only 910 million yuan, down to the same period in 2012. From March 26 to April 1, the number of flights decreased by nearly 80% year-on-year; The number of subway trips in 10 major cities decreased by about 40% year-on-year. The repair of core CPI continued to be blocked. In March, the core CPI was + 1.1% year-on-year, unchanged from the previous value. Looking ahead, as the epidemic has not yet seen a clear inflection point, the problem of tight stock demand and supply continues to exist, and there is still room for upward growth in short-term CPI food items. In April, CPI is expected to rise by about 2% year-on-year.
Upstream prices generally rose, and PPI increased month on month
In March, PPI increased by + 1.1% month on month and + 8.3% year-on-year (previous value + 8.8%), and the rise of crude oil, coal, nonferrous metals and other commodities strongly supported PPI. In terms of coal, the current round of rise in crude oil and natural gas prices has led to an increase in global coal demand. The rapid rise in overseas coal prices has led to the upside down of imported coal prices, and the number of China's coal imports has fallen. Under the demand of China's steady growth, the demand for coal has not decreased, the inventory is tight again, the coal available days of power plants in eight southern provinces have been reduced to less than 15 days, and the price of power coal has rebounded sharply. At the same time, the prices of non-ferrous metals such as copper and aluminum rose sharply under multiple pressures such as low inventory, Russia Ukraine conflict and rising smelting costs. On the one hand, the uncertainty of Russian and Ukrainian nonferrous metal supply leads to the increase of non-ferrous metal supply; On the other hand, the sharp rise in crude oil, natural gas and electricity prices has led to the continuous high production costs of smelting industries such as aluminum and zinc, which account for a relatively high proportion of energy costs in production, and the serious squeeze on smelting profits has reduced the production willingness of European smelters. This round of energy price rise has been significantly transmitted to the non-ferrous smelting industry.
Geopolitical conflicts continued and crude oil prices remained high
There was no significant breakthrough in many rounds of negotiations between Russia and Ukraine. The superposition of European and American sanctions and Russian anti sanctions measures continued to increase, and the confrontation situation of alternating escalation between the two sides promoted the rise of crude oil prices. Brent crude oil spot in March averaged $119, up 20% from February. In addition, OPEC + continues to maintain its original production reduction plan and has no intention to increase it. Reuters survey shows that its implementation rate of production reduction increased from 136% in February to 151% in March. At the end of March, the United States promised to release 1 million barrels of oil a day and 180 million barrels of strategic oil reserves in the next six months, adding to the rebound of China's epidemic, the contraction of crude oil demand and the decline of oil prices. Looking ahead, the gap between supply and demand of crude oil in the second quarter is gradually shrinking. OPEC + implemented a new production reduction benchmark in May, and we maintained the judgment that the oil price center fell back to $95 in the second quarter.
Risk tip: the friction strength of Russia and Ukraine is higher than expected; Covid-19 virus mutation led to another decline in global production capacity.
