Research conclusion
Event: on April 11, the Bureau of statistics released the latest price data. In March, CPI increased by 1.5% year-on-year, the previous value was 0.9%, the month on month growth was 0%, and the previous value was 0.6%; PPI rose 8.3% year-on-year, with the previous value of 8.8%, the month on month ratio of 1.1% and the previous value of 0.5%.
In March, the trend of CPI and PPI exceeded market expectations, with CPI year-on-year of 1.5% and Wande's expectation of 1.3%; PPI was 8.3% year-on-year, and Wande expected 8.1%. Factors affecting prices in March: first, the conflict between Russia and Ukraine led to sharp fluctuations in energy prices, and CPI and PPI energy related items rose; Second, the fermentation of covid-19 epidemic has weakened the demand of the service industry and reduced the price. For example, the price of air tickets has decreased by 0.2% from 18.0% last month; Third, the epidemic and its prevention and control measures have tightened some supply chains, and the prices of some products such as fresh vegetables have risen.
Rising energy prices pushed CPI upward year-on-year, while food prices remained a drag. In March, energy prices rose sharply. The prices of gasoline, diesel and liquefied natural gas rose by 24.6%, 26.9% and 27.1% respectively year-on-year, and the increase was expanded. The fuel for transportation vehicles closely related to energy rose by 24.1% year-on-year (the previous value was 23.4%). Food prices continued to decline, with food items falling by 1.5% (previous value - 3.9%), of which pork fell by 41.4% (previous value - 42.5%), fresh vegetable prices rose sharply by 17.2% (previous value - 0.1%) year-on-year affected by the epidemic, and flour prices rose by 4.6% (previous value 2.7%) affected by the rise of international food prices.
The expansion of industrial consumer goods not only was boosted by energy prices, but also reflected the transmission from PPI to CPI. Industrial consumer goods rose 3.5% year-on-year, an increase of 0.4 percentage points over the previous month, of which the increase in energy prices continued to expand. The price of industrial consumer goods excluding energy increased by 0.7% year-on-year and 0.3% month on month. Energy and food fluctuate greatly, which usually dominate the trend of CPI. The higher price of industrial consumer goods excluding energy shows that the high and volatile PPI has a trend of gradually transmitting to CPI.
PPI increased month on month, but the high base still dominated the year-on-year trend of PPI this year. The month on month increase of PPI expanded from 0.5% last month to 1.1%. Under the influence of the high base, the year-on-year growth rate fell by 0.5 percentage points to 8.3%. Specifically, the driving factor of PPI is mainly the rise of international bulk commodities driven by geographical conflicts, which drives the high prices of China's crude oil, non-ferrous metals and other related industries. The prices of oil and gas mining, coal mining and washing industries increased by 47.4% (former value 41.9%) and 53.9% (former value 45.4%) respectively. The price increases of non-ferrous metal smelting and calendering processing industry, chemical raw materials and chemical products manufacturing industry decreased, rising by 18.3% (former value 20.4%) and 15.7% (former value 19.7%) respectively, still in a high position.
The imported inflation risk brought by geopolitical conflict will slow down the decline of PPI. While the continuous fermentation epidemic not only inhibits service consumption, but also congests some commodity supply chains and raises prices. Therefore, it is very important to dredge the supply chain. Under the influence of the high base, the growth rate of PPI is expected to gradually decline this year, but the month on month growth of PPI has continued to expand in recent two months. Imported inflation may cause PPI to remain high in the first half of the year. In addition, there is no obvious inflection point in this round of covid-19 epidemic, and the epidemic prevention and control has hindered some transportation. The national standing committee meeting held on April 6 said that it is necessary to ensure smooth logistics and stable supply chain, and put forward the requirements of "maintaining economic operation within a reasonable range, mainly to achieve basic stability of employment and prices", "comprehensive measures to ensure smooth logistics and stable supply chain of industrial chain". On April 11, the joint prevention and control mechanism of the State Council also issued the notice on effectively ensuring the smooth transportation of freight logistics, which requires to ensure the smooth traffic trunk lines. It is strictly prohibited to block or close the ship locks of expressways, ordinary roads and channels without authorization, and it is strictly prohibited to set up epidemic prevention inspection points in the main line and service area of expressways.
Risk tips
Epidemic prevention and control led to a drop in total demand than expected;
Geopolitical conflict interpretation exceeded expectations, leading to a further sharp rise in the prices of crude oil and other commodities
