According to the data released by the China Bureau of statistics, in March 2021, the overall level of national consumer price (CPI) increased by 1.5% year-on-year, unchanged from the previous month; In March, the factory price (PPI) of national industrial producers increased by 8.3% year-on-year and 1.1% month on month.
The rise of tail warping factors led to the rise of CPI. In March, CPI increased by 1.5% year-on-year and 0.7% month on month. CPI rebounded by 0.6 percentage points year-on-year compared with the previous month. Among them, food prices fell by 1.5% year-on-year, 2.4 percentage points narrower than the decline of the previous month; Non food prices rose 2.2% year-on-year, up 0.1 percentage points from the previous month. The rebound of tail warping factors was the main reason for the upward CPI in March, and the new price rising factors continued to drive down inflation. CPI rose 0% month on month, down 0.6 percentage points from the previous month, food prices fell 1.2%, down 2.6 percentage points from the previous month, and non food prices rose 0.3% month on month, down 0.1 percentage points from the previous month. As a result, food prices fell sharply month on month, driving down inflation. From the perspective of food prices, pork prices fell sharply by 9.3% month on month, and the decline deepened by 4.7 percentage points last month. We believe that there are three main reasons why CPI may continue to rise in the later stage: first, the rise of tail raising factors continues to support CPI year-on-year; Second, the increase in food prices continued to narrow. From the perspective of pork prices, due to the concentration of fat pigs in the early stage and the significant reduction of market prices, the proportion of fat pigs sold in the market has dropped significantly, and even it is difficult to see the shadow of large pigs in some farmers' markets, indicating that pigs go to the warehouse quickly. Although the epidemic has restrained the short-term demand pressure, the supply pressure has gradually decreased, and the price has gradually warmed up; Third, there is still room for non food prices to rise as the rise in industrial prices is gradually transmitted to CPI.
PPI will continue to fall. In March, PPI was 8.3% year-on-year, down 0.5 percentage points from the previous month; It rose 1.1% month on month and accelerated by 0.6 percentage points month on month. The downward trend of tail warping factors has significantly reduced the year-on-year PPI, but the new price increase factors are still high, making the year-on-year downward speed of PPI lower than expected. In terms of classification, the price of means of production increased by 10.7%, 0.7% lower than that of the previous month, and the price of means of living increased by 0.9%, which was the same as that of the previous month. The rise in the price of means of production is the main factor driving PPI in a high position. We believe that in the later stage, PPI will still decline in trend under the background of the weakening of the commodity stimulus caused by the tail raising factor and the conflict between Russia and Ukraine.
