The year-on-year growth rate of CPI increased significantly. In March, the year-on-year growth rate of CPI was 1.5%, an increase of 0.6 percentage points over the previous period, higher than the market expectation (1.3%); In March, the month on month growth rate of CPI was 0.0%, down 0.6 percentage points from the previous period. Excluding the impact of food and energy prices, the core CPI in March increased by 1.1% year-on-year (the same as the previous period), the month on month growth rate changed from positive to negative to - 0.1% (the previous period was 0.2%), and the core inflation decreased steadily. We believe that the current rebound in the epidemic has delayed the recovery of demand and dragged down the rise of consumer inflation except food. We expect the upward range of year-on-year growth of CPI to slow down.
The impact of supply chain disruption caused by the epidemic on PPI will appear in the coming months. In March, the scissors gap between PPI and CPI continued to narrow to 6.8 percentage points. The month on month growth rate of CPI (0.0%) was lower than the month on month growth rate of PPI (1.1%) for the first time in five months, indicating that the fluctuation range of inflation on the consumer side was lower than that on the production side. We believe that with the narrowing of the base, the downward trend of year-on-year growth of PPI will slow down, the supply chain interruption caused by the current epidemic closure will further alleviate the downward trend of PPI, and the narrowing of the scissors difference between PPI and CPI will face a test. The sluggish food inflation has eased, the high energy prices have driven up the prices of transportation and communications, and the prices of other supplies and services have been significantly repaired. In March, the year-on-year decline of food, tobacco and alcohol prices narrowed to - 0.3% from - 1.8% in the previous period, and the drag on the year-on-year growth of CPI in the current month narrowed to 0.1% from 0.5% in the previous period. The downturn of food inflation has eased. Affected by high energy prices, the year-on-year growth rate of transportation and communication prices rose from 5.5% in the previous period to 5.8% in March, and the contribution rate to the year-on-year growth rate of CPI reached 0.9 percentage points, indicating that energy driven inflationary pressure still exists. In March, the price repair of other supplies and services was obvious, with a year-on-year growth rate of 2.1% (up 1.8 percentage points from the previous period) and a month on month growth rate of 1.0% (up 0.9 percentage points from the previous period).
Epidemic factors push up food inflation, and pork prices are expected to rise under the influence of policies. Demand fell after the Spring Festival, and the year-on-year growth rate of fresh fruit prices fell from 6.6% in the early stage to 4.3% in March; Due to the poor logistics and rising demand caused by the epidemic blockade, the year-on-year growth rate of fresh vegetable prices changed from negative to positive, from - 0.1% in the early stage to 17.2% in March. The price rebound is very significant. In March, pork prices remained at the bottom of the cycle, with a year-on-year decline narrowed to - 41.4% from - 42.5% in the previous period. With the collection and storage of central frozen pork reserves in March (two batches totaling 78000 tons), the stock of superimposed fertile sows has decreased significantly (it has decreased to 42.68 million in February). We expect that under the guidance of policies, the supply of pigs will fall marginally, and the pork price is expected to rise gradually from the bottom; In the short term, the impact of the epidemic on food inflation will still exist, which may further push up the price of fresh food.
