Summary
Event
On October 14, 2022, the National Bureau of Statistics released the CPI and PPI data for September 2022: CPI rose 2.8% year-on-year in September 2022 (the previous value was 2.5%), and core CPI increased by 0.6% year-on-year (the previous value was 0.8%); PPI rose 0.9% year-on-year (the previous value was 2.3%).
Comment
CPI hit a recent high year-on-year, showing the structural characteristics of "food prices accelerated, energy prices continued to fall, and core inflation continued to be sluggish". The subsequent upward momentum of CPI is limited, and we should pay more attention to the continued sluggishness of core CPI. 9 CPI rose 2.8% year-on-year, with a growth rate of 0.3 percentage points higher than in August; a month-on-month period of 0.3% (the previous value was -0.1%), and the year-on-year and month-on-month growth rates both increased compared with the previous period, and the year-on-year growth rate hit the highest since May 2020. From a structural perspective, the CPI showed the characteristics of "food prices accelerated, energy prices continued to fall, and core inflation continued to be sluggish" in September (the characteristics in August were "food prices continued to rise, energy prices accelerated to fall, and core inflation continued to be sluggish"). At present, pork prices are already at a high level, and the probability of subsequent decline is high. Therefore, with the subsequent decline in food prices, the upward momentum of CPI is limited. The leverage ratio of residents has increased significantly in 2020, and the deleveraging has not been obvious since 2021, indicating that the repair of residents' balance sheets is not smooth, which will restrict the recovery of residents' consumption and make it difficult for prices on consumer goods to perform well. We will pay more attention to the trend of core CPI in the future.
PPI's year-on-year growth rate dropped below 1%, and the month-on-month decline narrowed. The ex-factory price of the processing industry hit the lowest value since July 2020 year-on-year. We need to pay attention to whether the PPI will turn negative too quickly during the year. 9 PPI rose 0.9% year-on-year, down 1.4 percentage points from August (2.3%), and the increase in fell for 11 consecutive months; it was -0.1% month-on-month (the previous value was -1.2%), and the month-on-month decline of PPI narrowed significantly compared with July and August. Among the three specific sub-items of means of production, the year-on-year growth rate of ex-factory prices of mining, raw materials and processing industries in September was all falling, especially the processing industry, with the year-on-year growth rate reaching the lowest since July 2020. At present, the prices of commodities such as , such as international crude oil, nonferrous metals, , and commodities, continue to fluctuate and decline. The market demand in some domestic industries is weak, and the subsequent PPI may still decline. We need to pay attention to whether PPI will turn negative too quickly during the year.
Bond Market Views
Since this year, the secondary market of interest-rate bonds can be roughly divided into two different stages, and at different stages, the 10-year treasury bond yield fluctuations are different. In the future, we believe that we should have an average reply thinking about the bond market, but we should also realize that the twists and turns of this average reply cannot be achieved overnight.
Risk warning
The epidemic has been repeated recently, and uncertain factors for subsequent global economic recovery still exist; the domestic economy is still in the process of recovery, and the derivative risks brought by the epidemic cannot be ignored.
, Event
, Comments
.1, CPI hit a recent high year-on-year, and the structure shows the characteristics of "food prices accelerated, energy prices continued to fall, and core inflation continued to be sluggish". The upward momentum of subsequent CPI is limited, and we should pay more attention to the continued sluggishness of core CPI in September 2022, with a growth rate of 0.3 percentage points higher than August; it was 0.3% month-on-month (the previous value was -0.1%), and the year-on-year and month-on-month growth rates both increased compared with the previous period, and the year-on-year growth rate hit the highest since May 2020. In addition, the year-on-year growth difference between PPI and CPI continued to be negative in September, and the difference increased (the difference between CPI-PPI was 1.9 percentage points, and 0.2 percentage points in August), and the price environment was not ideal.
According to the calculations of the National Bureau of Statistics, in the year-on-year increase of CPI of 2.8% in September, the tail-strike impact of price changes last year was about 0.8 percentage points, and the impact of new price increases was about 2 percentage points. In August, the impact of the tail and the impact of the new price increase were 0.8 and 1.7 percentage points respectively. From this point of view, the year-on-year increase in CPI in September was mainly driven by new price increases.
From a structural perspective, the CPI showed the characteristics of "food prices accelerated, energy prices continued to fall, and core inflation continued to be sluggish" in September (the characteristics in August were "food prices continued to rise, energy prices accelerated to fall, and core inflation continued to be sluggish"):
The actual food price level is still rising.Food prices rose by 8.8% year-on-year in September, an increase of 2.7 percentage points from August (the month-on-month growth rate of food prices in September was 1.9%), indicating that food prices are accelerating. Among foods, pork prices rose by 36.0% year-on-year in September, an increase of 13.6 percentage points from August; the month-on-month growth rate was 5.4%, an increase of 5 percentage points from August. In addition, the prices of fresh fruits and fresh vegetables rose by 17.8% and 12.1% year-on-year respectively in September, and the increase is also increasing.
Energy prices continue to fall at a high level. Among non-food products, the prices of industrial consumer goods rose by 2.6% year-on-year in September, a decrease of 0.4 percentage points from August, showing a continuous decline; among them, the prices of gasoline, diesel and liquefied petroleum gas rose by 19.2%, 21.0% and 16.6% year-on-year respectively (20.2%, 21.9% and 19.8% respectively in August), with the increase all falling. In September, the price of industrial consumer goods fell by 0.7% month-on-month, the same as in August.
core CPI continued to be sluggish. The year-on-year growth rate of core CPI in September was 0.6%, down 0.2 percentage points from August, and the year-on-year growth rate hit the lowest since May 2021; the month-on-month growth rate of core CPI was 0% (0% in August).
combined with the performance of food, non-food, core CPI and related indicators in recent months, it can be roughly judged:
1) Currently, the year-on-year price fluctuations in CPI are mainly driven by the supply side, and demand is relatively weak. Energy prices have generally fallen from highs, while food prices have generally risen since late August. Judging from historical data, excluding the extremely special years when pig production capacity was severely impacted from 2019 to 2020, the highest average price of pigs in previous "pig cycles" before 2019 was around 21 yuan per kilogram. Therefore, even if we consider the rising cost factors in recent years, pork prices are currently at a high level, and the probability of subsequent decline is high. Therefore, with the subsequent decline in food prices, the momentum for CPI is limited.
2) In many previous reports, we pointed out that the outbreak of the epidemic has caused residents' leverage ratio to continue to rise, while slowing income growth and rising housing prices have all restricted the recovery of residents' balance sheets. Therefore, the weakness of CPI, especially the core CPI, and the continued decline in consumption recovery since 2021, are all manifestations of poor balance sheet repair of residents. The leverage ratio of residents increased significantly in 2020, and the deleveraging has not been obvious since 2021, indicating that the repair of residents' balance sheets is not smooth. We believe that this will restrict the recovery of residents' consumption and make it difficult for prices on consumer goods to perform well.
.2. The year-on-year growth rate of PPI dropped below 1%, and the month-on-month decline narrowed. The ex-factory price of processing industry hit the lowest value since July 2020 year-on-year. It is necessary to pay attention to whether PPI will turn negative too quickly during the year.
September PPI rose by 0.9% year-on-year, down 1.4 percentage points from August (2.3%), and the increase fell by 11 consecutive months; it was -0.1% (the previous value was -1.2%), and the month-on-month decline of PPI was significantly narrower than in July and August. Judging from the combination of year-on-year and month-on-month, the decline in the year-on-year growth rate of PPI is related to the relatively high base last year, and new price increases are also important factors. According to the Bureau of Statistics, among the year-on-year increase of 0.9% of PPI in September, the impact of the price change in the last year was about 1.3 percentage points, the impact of the new price increase was about -0.4 percentage points, while the impact of the tail gain was 2.5 percentage points, and the impact of the new price increase was about -0.2 percentage points. The new price increase factor in September continued to be negative.
From a structural perspective, the year-on-year growth rate of means of production in September was 0.6%, and the growth rate fell for 11 consecutive months (the previous value was 2.4%); the year-on-year growth rate of living materials prices was 1.8% (the previous value was 1.6%). The month-on-month growth rate of the prices of means of production and means of living in September was -0.2% and 0.1% respectively (the previous values were -1.6% and -0.1% respectively), and the month-on-month growth rate of means of production continued to be negative. Among the three specific sub-items of
production means, the year-on-year growth rates of ex-factory prices of mining, raw materials and processing industries in September were 3.5%, 5.8% and -1.9% respectively (10.1%, 7.8% and -0.7% respectively in August), and the growth rates are all falling, especially the processing industry, with the year-on-year growth rate hitting the lowest since July 2020. From a month-on-month perspective, among the three specific sub-items of means of production, the month-on-month growth rates of extractive industry, raw materials and processing industry prices in September were -0.8%, 0.1% and -0.3% respectively (the month-on-month growth rates in August were -4.5%, -2.4% and -0.9%, respectively), and the overall decline narrowed.
Previously, in our report "Supply Dominates Current Domestic Inflation Evolution - Comments on June 2022 CPI and PPI Data Comments and Bond Market Views", we pointed out that based on the two perspectives of year-on-year and month-on-month, the overall downward turning point of production means of production is forming in June. Since July, the price trend of means of production has been in line with this judgment. Looking ahead, the prices of international commodity prices such as crude oil and non-ferrous metals continue to fluctuate and decline, and the market demand in some domestic industries is relatively weak, and the subsequent PPI may still decline. We need to pay attention to whether PPI will turn negative too quickly during the year.
Bond Market Views
We believe that we should have an average reply thinking about the bond market, but we should also realize that the twists and turns of this mean reply cannot be achieved overnight:
1) Since the beginning of this year, the secondary market of interest-rate bonds can be roughly divided into two different stages, and at different stages, the 10-year treasury yield fluctuations are different. From the beginning of the year to August 15, the volatility period of the 10Y Treasury bond yield was roughly between 2.70% and 2.85%; since MLF was reduced by 10 bp on August 15, the overall 10Y Treasury bond yield has fluctuated around 2.65%.
2) For long-term interest rates, fundamentals should have passed the most difficult period. The economy will continue to recover in the 3rd and 4th quarters, but the intensity may be relatively limited. .
3) From the short-term perspective, the current market capital market is relatively abundant, with DR001 and DR007 lower than the corresponding policy interest rates. The interest rate of funds market has risen recently, but it is still at a low level.
Overall, the economy has passed the most difficult period and is currently in the recovery process, but the intensity of recovery may be limited, and the relatively abundant capital market may continue. This is also the reason why we believe that "we need to have the awareness of the average recovery within the year, but we also need to realize that the twists and turns of this average reply cannot be achieved overnight."
This article is from the securities company research report selected
