The epidemic restricts the CPI increase, and the high base dominates PPI downward
September 2022 CPI and PPI data comments
Core view
. Food dominates CPI rebound, but the epidemic weakens the rebound. In terms of food, due to factors such as the start of the upward cycle of pork and the seasonal rebound in food demand, the year-on-year pulling effect of food on CPI increased by 0.47 percentage points compared with the previous month, which is the main reason for the year-on-year recovery of CPI this month. In terms of non-food, the decline in international oil prices and the repeated domestic epidemics have led to a 0.2 percentage point decline in non-food prices, which is the main reason why CPI is lower than expected year-on-year. At the same time, the core CPI hit a new low since the second quarter of 2021, reflecting that residents' consumption demand is still weak.
2. CPI is expected to grow by about 2.5% in October. Looking back, the pork upward cycle has begun, the grain price increase effect is lagging behind, and the service demand is weakly repaired, which will provide upward support for the CPI center. However, the decline in the tail factor and the epidemic disturbances are difficult to eliminate in the short term, and the upward space of CPI is limited. CPI is expected to grow by 2.5% year-on-year and approximately 2.1% for the full year, and is generally moderate.
3. High base and decline in oil prices are the main reasons for the decline in PPI growth rate. was affected by factors such as the decline in the tail factor and the decline in the price of in commodities such as international crude oil. In September, the PPI fell by 1.4 percentage points year-on-year to 0.9%. However, the release of infrastructure demand has supported the prices of some industrial products. The transmission effect of upstream price increases to the downstream in the early stage was enhanced, which led to a narrowing of the year-on-year growth rate of PPI this month.
4. It is expected that the PPI will continue to fall rapidly this year, with a year-on-year increase of about -1.4% in October. Looking back, the sharp decline in the tail factor determines that PPI will continue to move rapidly downward. Although there is upward support for short-term energy prices, under the background of global economic slowdown, the rebound in international commodity prices has limited support for new price increases. It is expected that PPI will enter a negative growth range in the fourth quarter, with the central level around -1.3%, an increase of about 4.2% for the whole year.
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Event: In September 2022, the national consumer price index (CPI) rose 0.3% month-on-month, up 2.8% year-on-year, an increase of 0.3 percentage points from the previous month; industrial producer price index (PPI) fell 0.1% month-on-month, up 0.9% year-on-year, down 1.4 percentage points from the previous month.
. Food-dominated CPI rebound, but the epidemic weakened the recovery. It is expected that CPI will grow by about 2.5% in October
Pig cycle and holiday demand will jointly push up food prices. htmlFood prices in September expanded by 1.4 percentage points to 1.9%, and increased by 2.7 percentage points to 8.8%, affecting the CPI increase by about 1.56 percentage points, an increase of 0.47 percentage points from the previous month (see Figure 1). Among them, due to the seasonal rebound in demand and the reluctance of supply to sell, the price increase of pork increased by 5.0 percentage points to 5.4%. In addition, the base was relatively low in the same period last year, the year-on-year increase of pork increased by 13.6 percentage points to 36.0%, and the year-on-year pulling effect on CPI increased by 0.15 percentage points compared with the previous month; affected by high temperature and rainy weather, the month-on-month increase of fresh vegetables increased by 4.8 percentage points to 6.8%, and the year-on-year increase by 6.1 percentage points, which increased by 0.13 percentage points compared with the previous month; affected by the increase in holiday consumption demand, most other major foods also rose month-on-month, and the year-on-year pulling effect of eggs, fresh fruits and aquatic products on CPI increased by 0.14 percentage points compared with the previous month (see Figure 2-3).
Oil prices fell, the repeated epidemic situation and weak demand led to a decline in non-food prices. html Non-food prices rose 1.5% year-on-year in September, down 0.2 percentage points from the previous month (see Figure 4), and the pulling effect on CPI year-on-year declined by 0.17 percentage points. The following characteristics are shown in the non-food prices: First, affected by the decline in international oil prices, the year-on-year growth rate of fuel for transportation vehicles and water and electricity fuel in September both fell significantly, and the effect on the boosting of non-food prices was significantly weakened; Second, due to the spread of the domestic epidemic, the prices of service commodities fell by 0.2 percentage points from the previous month; Third, due to the weak domestic demand and the rapid downward trend of PPI, the prices of CPI clothing, rent, household appliances, etc. generally fell.
core CPI fell at a low level, indicating that the epidemic still has strong constraints on residents' consumption demand.html, which excluded food and crude oil in 49, increased by 0.6% year-on-year, down 0.2 percentage points from the previous month, the lowest since the second quarter of 2021 (see Figure 5). The main reason is that the epidemic has a strong inhibitory effect on residents' consumption demand. Looking back, it is expected that domestic epidemic prevention policies will be difficult to relax significantly in the short term. In addition, there is a high possibility that the epidemic will repeat in the winter. It is expected that the slope of the service industry's recovery will remain slow in the future. The core CPI is expected to rebound slowly this year, but the height is limited.
is expected to increase CPI in October by about 2.5% year-on-year. First, it is expected that the month-on-month increase in food prices in September will decline. According to , the data of the Ministry of Agriculture, as of October 13, the month-on-month growth rates of 28 key monitoring vegetables, 7 key monitoring fruits, and pork prices were -4.7%, -1.3%, and 7.9%, respectively. Vegetable prices turned from rising to falling, pork growth slightly expanded, and the decline in fresh fruits narrowed. Therefore, it is expected that the month-on-month growth rate of food in October will decline. Second, a new round of pig cycle has begun, and the base in October last year was low, and it is expected that the year-on-year pulling effect of pork on CPI will rebound; Third, the service industry's recovery and price transmission effect will increase, which will provide upward support for non-food prices, but the epidemic disturbance and weak demand restrict the recovery; Fourth, the tail factor of CPI in October fell by 0.7 percentage points compared with September (see Figure 6).
2. The high base and the decline in oil prices have led to a decline in PPI. It is expected that the PPI will grow by about -1.4% in October
Affected by the decline in international commodity prices such as high base and crude oil, the ex-factory price of industrial producers (PPI) in September fell by 1.4 percentage points year-on-year to 0.9%. However, the release of infrastructure demand has supported the prices of some industrial products, and the decline in PPI narrowed in a single month. Among them, means of production and means of living increased by 0.6% and 1.8% year-on-year, down 1.8 and up 0.2 percentage points from the previous month, the two changed inversely (see Figure 7). Judging from the sub-item of daily necessities, the price increase of food, clothing and general daily necessities has rebounded, and the price decline of durable consumer goods remains the same as last month, indicating that the price increase in the upstream is gradually transmitting to the middle and downstream in the previous period (see Figure 8).
From the industry perspective, the pressure of imported inflation has weakened, and prices related to infrastructure and some downstream industries have rebounded month-on-month. First, due to the decline in international commodities prices such as crude oil, the ex-factory prices of the crude oil industry chain industry continued to decline month-on-month (see Figure 9); second, due to the release of domestic infrastructure investment demand, upstream coal mining, non-ferrous metal mining, non-metal selection and other industries all rose month-on-month; third, agricultural and sideline food, communications electronics, clothing and other industries, PPI prices also rose, showing that the upstream, mid- and downstream price transmission effect has been enhanced.
is expected to grow by about -1.4% in October. First, the PPI tail factor in October fell by about 2.5 percentage points from September (see Figure 10); second, the efforts of infrastructure and the expected recovery of real estate will provide certain support for domestic pricing commodities, but the policy of ensuring supply and stabilizing prices continues to advance, and the month-on-month increase in prices of coal and midstream and downstream industrial products such as coal are relatively controllable; third, factors such as OPEC production cuts, escalating geopolitical conflicts, and the impact of the epidemic have disturbed the global energy supply. The momentum of rising international energy prices has increased in the short term, but the global economic slowdown has become a foregone conclusion, and demand has declined. There is limited room for crude oil price to rise.
. The negative scissors gap between PPI and CPI has expanded, and the profit structure of upstream, middle and downstream tends to improve in the future
PPI and CPI scissors gap reflects the changes in the profit space of industrial enterprises to a certain extent. The widening of the gap between PPI and CPI scissors usually means the continuous recovery of corporate profits and economic momentum (see Figure 11-12). However, this round of widening of the PPI and CPI scissors gap is mainly driven by the price increase of upstream raw materials, with significant structural characteristics and not a comprehensive price increase. As domestic demand recovery is weak, the ability of mid- and downstream industries to transfer costs is still weak, resulting in a strong impact on mid- and downstream profits, which in turn suppresses the willingness of mid- and downstream enterprises to invest and expand production, which is not conducive to the recovery of domestic economic momentum.
9: The scissors difference between PPI and CPI in September changed from -0.2% last month to -1.9%, with negative growth for two consecutive months. The turning negative scissors difference between the two means that the profit growth rate of industrial enterprises will slow down marginally in the future, but the upper, middle and lower structures are expected to improve marginally.
This article comes from the financial world
