Main points:
Event: the United States released the latest inflation data for March. Among them, CPI increased by 8.5% year-on-year and 1.2% month on month, a new high since December 1981. Core CPI increased by 6.5% year-on-year and 0.3% month on month, reaching a new high in August 1982.
Core conclusions:
\u3000\u30001. Us CPI rose 8.5% year-on-year in February, exceeding market expectations of 8.4%. Up 1.2% month on month, in line with market expectations. Compared with last month, inflation increased more month on month. The main reason is that gasoline, food and other items increased significantly compared with last month, of which gasoline increased by 18.3% month on month, with the largest increase. Core CPI rose 6.5% year-on-year, in line with market expectations, with a month on month increase of 0.3%, and continued to decline by 0.2 percentage points compared with last month. The sharp rise in gasoline prices and food prices shows that the rise in global commodity prices caused by the conflict between Russia and Ukraine has been transmitted to the consumer end of American residents, driving the acceleration of US inflation. The core CPI continued to decline month on month, indicating that the endogenous growth momentum of inflation in the United States continued to decline. However, the core services represented by housing increased by 0.6% month on month, up 0.1 percentage points compared with last month, which means that the subsequent inflationary pressure on us services will continue to increase, dragging down the downward speed of US inflation. Overall, this month's data is basically in line with market expectations, reflecting the acceleration of inflation driven by the rise of us energy and food prices under the influence of the Russian Ukrainian conflict and sanctions against Russia. In the follow-up, due to the uncertainty of the conflict between Russia and Ukraine, the high volatility of commodity prices, and the gradual shift from commodity consumption to service consumption in the United States, the core inflation in the United States will remain strong. We expect that the inflation in the United States will remain high in the short term, and the subsequent decline is slow.
\u3000\u30002. Specifically, this month's inflation has more reflected the impact of the conflict between Russia and Ukraine and the rise in commodity prices caused by European and American sanctions against Russia. In terms of energy, it rose 32% year-on-year and 11% month on month, an increase of 7.5 percentage points compared with the previous month, mainly driven by the sharp rise in gasoline prices. In terms of food, it increased by 8.8% year-on-year and 1.0% month on month. Household food increased by 10% year-on-year, the highest since March 1981. The core CPI data shows that the current inflation momentum of the United States and China is slowing down, in which the core goods have decreased more month on month, and the core services have improved month on month. The deviation between the two trends indicates that American residents are shifting from commodity consumption to service consumption, pushing up the pressure of service inflation. In the follow-up, as the US service consumption has not returned to the pre epidemic level, the service inflation pressure may continue to rise.
1) in terms of energy, in March, the energy items increased by 32% year-on-year and 11% month on month, 7.5 percentage points higher than that in January. Among them, gasoline and fuel increased by 18.1% and 22.3% respectively, 11.4 percentage points and 14.6 percentage points higher than that in January. The sharp rise in energy inflation data shows that the impact of the Russian Ukrainian conflict on crude oil and other commodities has been reflected in the U.S. energy consumption market. Combined with the rise in travel demand driven by the relaxation of epidemic control in the United States, the U.S. gasoline price rose to $4.18/gallon in March, up 20% from February.
2) in terms of food, food items increased by 8.8% year-on-year and 1.0% month on month in March, which was the same as that in February. Among them, food at home increased by 10% year-on-year and 1.5% month on month, which was the main reason for the rise of food items, and reached the highest value since March 1981. Among them, grains, baked goods and dairy products increased by 9.4% year-on-year, and meat and eggs increased by 13.7% year-on-year, showing a relatively strong rise.
3) in the core CPI data, the core CPI in February increased by 6.5% year-on-year and 0.3% month on month. Compared with the previous month, it decreased by 0.2 percentage points, indicating that the endogenous growth momentum of inflation is slowing down. In terms of sub items, core commodities decreased by 0.4% month on month, down 0.8 percentage points from last month, with a large decline. Among them, the number of used cars decreased by 3.8% month on month, and continued to decline by 3.6 percentage points compared with the previous month, falling for four consecutive months, which is the main reason for the decline of core commodities. In terms of new cars, it increased by 0.2% month on month, down 0.1 percentage points from the previous month, and the increase was also small. Core services rose 0.6% month on month, up 0.1 percentage points from January, rising for four consecutive months. Among them, the transportation item increased by 2.0% month on month, 0.6% higher than that in January, and the air ticket item increased by 10.7% month on month, indicating that the travel demand of U.S. residents gradually recovered after the relaxation of epidemic prevention and control. Housing items increased by 5.0% year-on-year, the highest since May 1991, with a month on month increase of 0.5%, which was the same as that in January. The deviation between the trend of core goods and core services shows that American residents are shifting from commodity consumption to service consumption, driving the inflationary pressure of services to rise gradually. In the follow-up, as the US service consumption has not returned to the pre epidemic level, the service inflation pressure may continue to rise.
\u3000\u30003. In the short term, the short-term rising power of energy is weakened, and the Shenzhen Agricultural Products Group Co.Ltd(000061) price is expected to continue to increase in the short term. Core commodity inflation is expected to continue to fall, but core service inflation may continue to rise, driving the overall core inflation to fall more slowly. The gradual rise of US inflation expectations may further promote the "wage inflation spiral". On the whole, the short-term inflation pressure in the United States is large, and the subsequent decline speed will be slow under the drag of core services.
1) the short-term rising power of energy is weakened, and Shenzhen Agricultural Products Group Co.Ltd(000061) price is expected to increase continuously in the short term. In terms of energy, as of April 11, the price of gasoline in the United States had dropped to $3.94/gallon, falling for four consecutive weeks. Considering that the current geopolitical impact has been fully reflected, the United States has released 60.559 million barrels of crude oil reserves and the negotiation of the Iran nuclear agreement is coming to an end, the gap between crude oil supply and demand is expected to narrow. We expect that there is little possibility of another sharp rise in gasoline prices, and the contribution of subsequent energy items to U.S. inflation will decline In Shenzhen Agricultural Products Group Co.Ltd(000061) terms, Russia and Ukraine are important granaries in the world. Russia and Ukraine are the world's first and fourth wheat exporters respectively. At the same time, Russia is also an important fertilizer exporter in the world. The occurrence of conflict has greatly affected the relevant Shenzhen Agricultural Products Group Co.Ltd(000061) exports of the two countries. At present, the conflict continues. If the two countries fail to export Shenzhen Agricultural Products Group Co.Ltd(000061) continuously and the price of chemical fertilizer rises, the global Shenzhen Agricultural Products Group Co.Ltd(000061) price may continue to rise, and the probability of subsequent food prices will continue to rise; 2) Core commodities are expected to continue to fall, but core services may continue to rise, driving the overall core inflation to fall more slowly. In terms of core commodities, the U.S. Mannheim used vehicle value index fell 3.37% month on month, indicating that the current downward trend of used car prices will continue. In terms of new cars, as Russia is an important exporter of metals (palladium, nickel, etc.), sanctions against Russia may cause the price of auto related parts to rise, forming a certain support for the price of new cars. In terms of core services, the upward trend of service inflation may not be over yet. On the one hand, the US non farm employment in March showed that the hotel and leisure industry are the main part of current employment, indicating that the consumption of relevant services of US residents is still recovering under the policy of relaxed epidemic control; On the other hand, the most important housing inflation in core services also increased significantly year-on-year, and the month on month increase also maintained the speed of last month, providing a solid support for service inflation; 3) The gradual rise of US inflation expectations may further promote the "wage inflation spiral".
The latest survey by the New York Fed shows that the median one-year inflation expectation of American residents reached 6.6%, significantly higher than 6.0% last month. The median three-year inflation expectation fell back to 3.67%. The US March non farm data show that the current US labor market is relatively hot. The rise of inflation expectations will enable us residents to seek higher wages in the job market, which will further push up the rise of service prices, and the "wage inflation spiral" will be further deduced. On the whole, the current short-term inflationary pressure in the United States is still large, and the uncertainty of energy and food prices is large. The rising price of core services will gradually consolidate the foundation of American inflation, resulting in the slow decline of subsequent inflation.
\u3000\u30004. US inflation in March basically reflects the impact of geopolitical risks. We believe that US inflation pressure remains, but the subsequent month on month increase will be reduced. Considering that the current US job market has achieved full employment and is relatively hot, we expect that the Federal Reserve will announce an interest rate increase at the FOMC meeting from May to June, of which the interest rate may be increased by 50bp in May and announced the reduction of the table, which will also be faster. As the two most important data before the FOMC meeting in May, the US non farm employment and inflation data in March show that the current US labor market and inflation level are in a relatively hot state, which will promote the fed to tighten faster. Powell said in his recent speech that the Russian Ukrainian issue will worsen the inflation situation in the short term and bring some uncertainty to future economic development. He will take necessary measures to ensure that prices return to stability. If it is concluded that it is appropriate to raise the federal funds rate by more than 25 basis points in one or more meetings, action will be taken accordingly. This means that the Fed should have taken controlling inflation as the primary goal of monetary policy. At the same time, due to the impact of the Russian Ukrainian conflict on inflation, the Fed may surpass the neutral interest rate and take a more tightening position. We believe that under the background of rising inflation and a relatively hot job market, the Federal Reserve will raise interest rates continuously from May to June, of which the rate increase in May is 50bp, and immediately shrink the table, which will be faster.
Risk tips
International tensions triggered higher than expected inflation, and the covid-19 epidemic situation deteriorated significantly.
