On October 13, the National Bureau of Statistics released data that China's consumer price (CPI) in September was flat year-on-year, up 0.2% month on month. From January to September, the average consumer price of the whole country rose 0.4% over the same period of the previous year.
In September, the producer price (PPI) of industrial producers nationwide fell by 2.5% year on year and rose by 0.4% month on month. The purchase price of industrial producers fell by 3.6% year on year and rose by 0.6% month on month. From January to September, on average, the ex factory price of industrial producers dropped by 3.1% compared with the same period last year, and the purchase price of industrial producers dropped by 3.6%.
Affected by the expansion of year-on-year decline in pork and vegetable prices and the base of the previous year, CPI in September was flat on a year-on-year basis
In September, CPI was flat on a year-on-year basis, falling 0.1 percentage point from the previous value. Dong Lijuan, chief statistician of the Urban Department of the National Bureau of Statistics, said that in September, the consumer market continued to recover, and CPI continued to rise month on month. However, affected by the higher base of comparison in the same period of last year, it turned from rising to flat year on year. It is also estimated that in the year-on-year change of CPI in September, the tail lifting impact was about - 0.2 percentage points, and 0.2 percentage points last month
From the perspective of the reasons affecting the year-on-year increase of CPI, food prices fell by 3.2%, 1.5 percentage points more than that of the previous month, mainly due to the rise of food prices in the same period last year, which affected the decline of CPI by about 0.60 percentage points. Among them, the prices of pork and fresh vegetables decreased by 22.0% and 6.4% respectively, with a decrease of 4.1 and 3.1 percentage points respectively, which affected CPI by 0.51 percentage points in total, accounting for nearly 90% of the total decrease in food prices; The price of mutton and edible oil decreased by 5.1% and 3.1% respectively, both of which increased; The prices of aquatic products and fresh fruits decreased by 1.5% and 0.3% respectively.
In terms of non food prices, the increase was 0.7%, and the increase was 0.2 percentage points, which affected the CPI increase by about 0.57 percentage points. Among them, the price of industrial consumer goods fell by 0.3%, narrowing by 0.5 percentage points, of which the price of gasoline fell by 1.2%, narrowing by 3.4 percentage points. The service price rose by 1.3%, the same increase as last month, among which the price of air tickets, tourism and hotel accommodation rose by 14.0%, 12.3% and 10.4% respectively, all of which fell back; The price of education services rose by 1.8%, an increase to some extent.
However, on a month on month basis, CPI continued to rise, rising 0.2%, 0.1 percentage points lower than that of last month. Among them, food prices rose by 0.3%, 0.2 percentage points lower than that of the previous month, affecting CPI growth by about 0.06 percentage points. It is worth noting that the market supply is sufficient before the Mid Autumn Festival and the National Day this year, and the food price increase is slightly lower than the historical average over the same period. Non food prices rose 0.2%, the same as last month, affecting CPI growth by about 0.14 percentage points.
Wang Qing, the chief macro analyst of Oriental Jincheng, told the surging news reporter that the CPI fell back to flat in September on a year-on-year basis, mainly because of the impact of the sharp increase in the base number in the same period last year, and the expansion of the year-on-year decline in pork and vegetable prices in that month, driving the year-on-year decline in food CPI in September to expand. However, in September, CPI kept rising month on month for three consecutive months, and the prices of all kinds of goods and services rose month on month, which shows that prices are still rising on the whole, which is also a sign of a stronger economic recovery.
"The price of pork fell back in September, mainly because the supply of pork continued to be loose in September." Zhou Maohua, a macro researcher in the financial market department of Everbright Bank, told the surging reporters that because the performance of pork consumption was still weak, pork prices rebounded since July, breeding profits improved, and holiday consumption expectations drove the increase of pork market supply, resulting in the suppression of pork prices in September.
In addition to the impact of pork and vegetable prices, Wang Qing also pointed out that the current automobile price war is still continuing. In September, the price of transportation tools fell 0.3% month on month, expanding to - 4.6% year on year. At the end of the summer vacation, the price of tourism fell faster in September, and the year-on-year growth narrowed significantly, which is also the reason for the year-on-year decline of CPI in September.
On a month on month basis, CPI has rebounded for three consecutive months. Most of the analysts interviewed believe that this reflects the overall recovery of domestic prices and further confirmation of price improvement.
Wang Qing said that there are two driving factors behind the momentum of price increase. First, the steady growth of macro policies in the third quarter continued to increase, various consumer promotion policies emerged frequently, and market consumer confidence improved; Second, the internal repair momentum of residents' consumption continued to release, which is particularly evident in the service consumption fields such as tourism, travel, culture and entertainment.
"On the whole, the recovery of price growth momentum in the third quarter also reflects to some extent that the momentum of economic recovery is becoming stronger," said Wang Qing.
Zhou Maohua said that inflation continued to improve in September, further enhancing the market's confidence in price stability and recovery. The improvement in prices reflects that supply and demand in the domestic market are being restored in the direction of balance. "However, prices are low at present, and the repair of domestic demand still needs to be supported by proactive macro policies."
The demand gradually recovered, and the month on month increase of PPI in September expanded and the year-on-year decrease narrowed
Dong Lijuan said that in September, affected by factors such as the gradual recovery of industrial demand and the continued rise of international crude oil prices, the month on month increase of PPI expanded and the year-on-year decline narrowed.
From a year-on-year perspective, in September, the price of means of production fell by 3.0%, narrowing by 0.7 percentage points; The price of means of living fell by 0.3%, an increase of 0.1 percentage point.
The price decline of major industries narrowed. The price decline of coal mining and washing industry, chemical raw materials and chemical products manufacturing industry, petroleum coal and other fuel processing industry, ferrous metal smelting and rolling processing industry, and oil and natural gas mining industry was 3.3% - 15.6%. The above five industries together affected the year-on-year decline of PPI by about 1.42 percentage points, accounting for nearly 60% of the total decline.
On a month on month basis, international crude oil prices continued to rise, driving the prices of domestic oil and natural gas exploration industry up 4.1%, and the prices of oil, coal and other fuel processing industries up 3.1%. Improved demand and tight supply pushed up the prices of nonferrous metal smelting and rolling processing industries by 1.2%, and coal mining and washing industries by 1.1%. The prices of ferrous metal smelting and rolling processing industries were flat.
Zhou Maohua said that in September, PPI improved for three consecutive months compared with the same period last year, mainly because the prices of domestic clothing, daily necessities and other products rose, market demand picked up, and industrial products prices improved; At the same time, the prices of energy, raw materials and other commodities rebounded in September, and the base effect of last year was weakened.
"The purchase price and purchase volume of main raw materials in the PMI index in August improved, reflecting that some industry enterprises gradually increased their inventory reserves to cope with the recovery of future market demand. At the same time, the crude oil price in September turned positive year-on-year, which boosted the prices of domestic industrial producers." Zhou Maohua said.
Wang Qing believed that PPI rose month on month in September, and the increase was accelerated, while the year-on-year decrease was narrowed. It was further confirmed that - 5.4% in June was the bottom of this round of PPI deflation.
Wang Qing said that, in terms of categories, on the one hand, driven by the rising prices of crude oil, non-ferrous metals and other bulk commodities, the PPI of means of production rose month on month and accelerated in September, and the year-on-year decline also significantly converged. On the other hand, the month on month increase of PPI of means of living in September was the same as that of last month, while the year-on-year decline was slightly wider, consistent with the current core CPI, which continues to hover at a low level in the range below 1%. However, from the perspective of specific sub items, the failure to speed up the month on month PPI of means of living in September was mainly related to the slowdown of food price rise. The month on month PPI performance of clothing, daily necessities, durable consumer goods and other categories all improved slightly, confirming the marginal recovery of the consumer market.
Wang Qing further pointed out that it should also be noted that the cement price in the third quarter was still lower as a whole, and the year-on-year decline continued to expand, which showed that the price of bulk industrial products rose in the current quarter, which was still mainly due to the increase in stock demand brought about by the rising market confidence and rising demand expectations, and the actual demand rebound was limited. The main reason behind this is that the current efforts to repair consumer demand still need to be further strengthened, and real estate investment continues to decline, which offset the impact of maintaining a high growth rate of infrastructure investment.
Outlook: CPI trend is moderate, and year-on-year decline of PPI is expected to continue to narrow
Looking forward to the next stage, Zheng Houcheng, the chief macro economist of Yingda Securities, believes that the year-on-year growth of CPI in October faces many advantages in terms of base effect, but also negative effects from both "lard" aspects, and the rate may fluctuate slightly on the basis of September. In October, it was difficult for PPI to rise significantly year on year, and the monthly marginal growth rate continued to narrow.
In terms of CPI, Zheng Houcheng said that in October, the average wholesale price of pork continued to be under pressure, which made the pork CPI in the month lower than that in September. At the same time, although the "Palestine Israel conflict" benefited the international oil price in the short term, the global macro-economy was under pressure. Saudi Arabia intended to increase production, and the estimated international oil price was lower than that in September, Negative In October, the CPI of fuel for transportation increased year on year. In addition, from the perspective of base effect, the CPI in September 2022 and October 2022 were 2.80% and 2.10% year on year, respectively. The base declined significantly, which was more favorable than the year-on-year growth of CPI in October.
Zhou Maohua believes that CPI is expected to continue to pick up in the year, mainly because the repair of consumer demand is expected to drive the gradual improvement of commodity and service consumption; The price of crude oil rebounded and the demand for services was released, and the price of services increased steadily. On the other hand, domestic supply is ahead of demand recovery, pig production capacity is abundant, consumer goods supply is sufficient, and the price trend is moderate.
Wang Qing also said that it is expected that CPI will continue to rise in October on a month on month basis, and will resume positive growth year on year, which is expected to rise to about 0.3%. However, despite the low risk of deflation, low inflation is still an indisputable fact. "This is fully reflected in the fact that in September, excluding the volatile energy and food prices, the core CPI, which better reflects the fundamental price level, was 0.1% month on month and 0.8% year on year, both of which remain at a significantly low level." The main reason behind this is that while the supply of goods and services is stable, the current consumer confidence is weak, and the efforts to repair consumption still need to be further boosted.
Wang Qing pointed out that the sustained low inflation is not only the result of weak consumption, but also the impact on consumer psychology should not be underestimated - the price level is low, and residents will be more inclined to postpone consumption. Therefore, focusing on strengthening counter cyclical adjustment, it is necessary for current macro policies to moderately stimulate residents' consumption and break the negative cycle. It is expected that in addition to efforts to expand consumption scenarios and optimize the consumption environment, local departments will also issue more consumption vouchers and subsidies, and further reduce taxes and fees related to automobile, electronics, home furnishing and other mass consumption. "With the prospect of continued decline in external demand, this will be an important driving force for the sustained strengthening of the momentum of economic recovery in the fourth quarter and early next year."
In terms of PPI, most of the analysts interviewed believe that the deflation rate of PPI in the next stage is expected to continue the process of narrowing, but it is difficult to rise significantly, and it is still difficult to become a regular before the end of the year.
Zheng Houcheng believes that, from the perspective of the new price increase factors of PPI in the next stage, JPMorgan Chase's global manufacturing PMI recorded 49.10 in September, although up 0.10 percentage points from the previous value, it has been under the boom and bust line for 13 consecutive months. In addition, the U.S. CPI and PPI in September were both higher than the market expectations on a year-on-year basis, increasing the probability of the Federal Reserve to raise interest rates within the year, which was bad for international oil prices and non-ferrous metal prices, However, during the National Day holiday, the sales of commercial housing did not appear hot, indicating that China's real estate investment growth may still face certain pressure, and continue to pressure the prices of rebar and other black products.
key word: Price
Decrease
Percentage point
Wang Qing
