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The scattered epidemic affected CPI from rise to fall month on month, and the performance of non food prices was differentiated. In 2021, the annual CPI increased by 0.9% year-on-year. In December, affected by the spread of the epidemic, the decline of food prices and the base effect, the year-on-year increase of CPI decreased by 0.8 percentage points to 1.5% compared with the previous value. Under the influence of improved supply and epidemic situation, food prices in December changed from a 1.6% increase in the previous month to a 1.2% decrease, affecting the CPI to decline by about 0.22 percentage points; The increase of non food prices fell by 0.4 percentage points to 2.1% compared with the previous month, of which the effect of the upstream policy of ensuring supply and stabilizing prices showed that the price of industrial consumer goods rose by 2.9%, the increase fell by 1.0 percentage points, and the service price rose by 1.5%, the increase was the same as that of the previous month. The prices of the seven categories increased and decreased year-on-year. Except for education, culture and entertainment, the year-on-year increase of the other six categories narrowed, and the year-on-year increase of education, culture and entertainment prices expanded by 0.1 percentage points to 3.1%; The year-on-year increase of transportation and communication decreased by 2.6 percentage points to 5.0% compared with the previous month, and the prices of gasoline and diesel increased by 23.0% and 25.4% respectively, both of which decreased significantly compared with the previous month, driving the year-on-year increase of fuel prices of transportation vehicles to decrease by 13.2 percentage points to 22.5%. On a month on month basis, CPI fell by 0.3% from a 1.4% rise last month. Affected by the increase in the supply of fresh vegetables and pork and the decrease in demand, food prices decreased by 0.6% from 2.4% last month; Affected by the price decline of upstream products and the scattered epidemic, the increase of non food prices changed from flat last month to a decrease of 0.2%, and the prices of seven categories increased by two, leveled by two and decreased by three month on month. The price of industrial consumer goods increased from 0.3% last month to a decrease of 0.5%, and the price of gasoline and diesel continued to fall, driving the price of fuel for transportation from an increase of 3.0% to a decrease of 5.2%; Continued to be affected by the spread of the epidemic, tourism prices fell from 3.5% month on month to flat, and hotel accommodation prices fell by 0.8%; However, as the Spring Festival is approaching, the price of domestic services has increased by 1.3%. In December, the core CPI excluding food and energy prices rose by 1.2% year-on-year, the same as that of the previous month.
The year-on-year increase in fresh vegetable prices narrowed, and the month on month increase in pork prices fell. On a year-on-year basis, the price of livestock meat decreased by 22.2% in December, an increase of 2.5 percentage points over the previous month. Among them, affected by the increase in the number of vegetables on the market and the decline in transportation costs, the year-on-year increase in fresh vegetable prices narrowed by 20.0 percentage points to 10.6% compared with the previous month. Affected by the end of winter curing and the acceleration of pig slaughter, pork prices decreased by 36.7%, an increase of 4.0 percentage points over the previous month. On a month on month basis, except for fresh vegetables and eggs, the prices of other food, tobacco and alcohol subcategories show an upward trend as the Spring Festival approaches. The price of livestock and meat rose by 0.5% month on month. Driven by reduced demand and increased supply, the price increase of pork narrowed by 11.8 percentage points to 0.4%; In the early stage, the price of vegetables was high due to extreme weather. Recently, with the new round of listing, the supply of vegetables gradually increased, and the price of fresh vegetables decreased by 15.5% from 6.8% last month; Due to seasonal factors and the decline in transportation costs, the increase in fresh fruit prices decreased by 0.9 percentage points to 3.4%. In January 2022, the high-frequency data showed that the prices of 28 key monitored vegetables and pork fell, but the Spring Festival was approaching and the scattered epidemic situation may have a certain pull on the demand side, and the food CPI may pick up in January.
The year-on-year increase of PPI continued to fall, and the prices of most industries fell. From a month on month perspective, PPI in December fell by 1.2% from a flat level in the previous month. Among them, the price decline of means of production expanded by 1.5 percentage points to 1.6%; The price of means of living changed from an increase of 0.4% to flat, and the decline in the price of upstream products gradually transmitted to means of living. In terms of industries, the industrial ex factory prices of most industries are in the downward range. Due to the increasing implementation of China’s policy of ensuring supply and stabilizing prices, the prices of coal related products continue to fall; Affected by the weakening demand in winter, the prices of building materials related products such as steel and cement have decreased; Lower international crude oil and nonferrous metal prices drive Petrochina Company Limited(601857) and metal related industry prices down; However, due to the rising price of imported LNG, the price of China’s gas related industries is still in the upward range; With the expansion of the floating range of transaction prices in the coal-fired power generation market, the prices of power related industries rose. Specifically, the price decline of coal mining and washing industry expanded by 3.4 percentage points, and the price decline of coal processing expanded by 7.0 percentage points; The prices of ferrous metal smelting and rolling processing industry, non-metallic mineral products industry, oil mining industry, refined petroleum products manufacturing, chemical raw materials and chemical products manufacturing industry, and non-ferrous metal smelting and rolling processing industry have decreased to varying degrees. On a year-on-year basis, the PPI rose by 10.3% in December, down 2.6 percentage points from the previous month, and the annual PPI rose by 8.1% year-on-year. Among them, the price of means of production rose by 13.4% in December, down 3.6 percentage points; The price of means of subsistence increased by 1.0%, which was the same as that of the previous month. Among the 40 industrial categories surveyed, 37 prices rose, the same as last month. Among the major industries, the oil and natural gas mining industry has the largest decline in price increase, followed by coal mining and washing industry, followed by oil, coal and other fuel processing industry and ferrous metal mining and dressing industry, with an increase and decline rate of more than 10%; The largest increase in price is the power and heat production and supply industry, followed by the gas production and supply industry. At the beginning of 2022, the South China Industrial Products Index rose slightly, the cold weather and strong overseas demand supported energy demand. However, with the OPEC + production increase plan unchanged, the crude oil production of non OPEC + oil producing countries such as the United States gradually increased. It is expected that the short-term upward space for oil prices is limited, but it is still affected by geopolitics, covid-19 epidemic and other uncertain factors, Short term or remain high. The effect of China’s policy of ensuring supply and price stability continues to be released, the ban on Indonesian coal export may be gradually lifted, and the base of last year continues to rise. It is expected that the year-on-year growth rate of industrial producer prices will continue to fall in January.
CPI is expected to rise slightly and PPI will continue to fall. In December, the scissors gap between CPI and PPI narrowed further, down to 8.8 percentage points from 10.6 percentage points in the previous month. In terms of CPI, in January 2022, due to the scattered epidemic situation and the Spring Festival, food prices may rise slightly year-on-year; The base number of non food prices fell last year, and the higher prices of upstream products will continue to be transmitted to the downstream. However, the high decline of upstream prices has weakened the new price increase factors of non food. In addition, the epidemic situation and the encouragement of local Chinese New Year in many places have a certain negative impact on non food prices. Non food prices may decline steadily, and CPI is expected to rise slightly in early 2022. In terms of PPI, the supply and demand of international bulk commodities gradually tend to balance, and the prices gradually peak and fall. The effect of China’s coal and other policies to ensure supply and stabilize prices continues to appear. Coupled with the upward base last year, PPI is expected to continue to fall in January, but the decline range is relatively mild.
Risk tip: the crude oil price fluctuates sharply and the demand is lower than expected.
