Original title: Pork fell again, coal rose, PPI and CPI scissors gap widened
How much impact did the rapid rise in commodity prices have on industrial production and household consumption? On October 14, the National Bureau of Statistics released September CPI (National Consumer Price) and PPI (National Industrial Producer Price) data. CPI rose by 0.7% year-on-year, but the growth rate fell back and remained flat month-on-month; the PPI growth rate continued to expand, with a year-on-year growth rate. Last month, it expanded by 1.2 percentage points, and the month-on-month increase was 0.5 percentage points higher than the previous month.
Industry experts pointed out that the PPI-CPI scissors gap widened to 10 percentage points. The decline in pork prices was the main factor dragging down the CPI. The increase in PPI was mainly affected by factors such as rising prices of coal and some energy-intensive industries. In the next stage, there is no basis for a sharp rise in prices, but the prices of industrial products may still remain high for a period of time.
Pork production capacity release prices fall
In September, supply and demand in the consumer market were basically stable, and prices were generally stable. According to data from the National Bureau of Statistics, CPI rose by 0.7% year-on-year, and the growth rate dropped by 0.1 percentage point from the previous month.
Regardless of year-on-year or month-on-month, food prices have fallen in September. From a year-on-year perspective, food prices fell by 5.2%, an increase of 1.1 percentage points from the previous month, affecting CPI by about 0.98 percentage points; from a month-on-month perspective, food prices fell from 0.8% last month to 0.7%, affecting CPI decline by about 0.12 Percentage points.
Wang Jun, chief economist of Centaline Bank, said in an interview with a reporter from Beijing Business Daily that the slight fall in CPI in September was mainly related to the large drop in food prices, which suppressed overall consumer prices. Among them, pork prices continued to release production capacity. The situation continued to decline. In addition, vegetables and fruits also fell slightly.
Data show that pork prices in September fell 46.9% year-on-year, and the rate of decline expanded by 2 percentage points; the month-on-month decline was 5.1%, and the rate of decline was larger than that of the previous month.
“In September, the average price of pork in the Ministry of Agriculture and Rural Affairs was 23.9 yuan, down 6% from August. The price of pigs was not affected by the Mid-Autumn Festival boosting demand, which continued to drag down the CPI restoration.” Zhejiang Merchant Li Chao’s team pointed out, according to Agricultural and Rural Affairs. According to the Ministry’s monitoring, the stock of live pigs continued to grow in August, and the supply is still in the upward channel, but demand has not yet bottomed out. The bottom of this round of pig cycle should appear in May and June of 2022.
Wu Chaoming, chief economist of Caixin Securities, told a reporter from Beijing Business Daily that the main reason for the continued sharp decline in pork prices was the continuous improvement of the pork supply side. From July 2020 to August 2021, the average year-on-year growth rate of the breeding sow stock was as high as 28%, which is higher than the previous rate of replenishment of live pigs. The substantial increase in the stock of reproductive sows will lag behind the slaughter of live pigs (pork supply), which will suppress the price of pork; in addition, although the demand for pork will appear seasonally as the weather turns cold However, changes in pork demand are relatively flat, which has limited boost to pork prices.
Unlike food prices, non-food prices in September changed from a month-on-month decline of 0.1% to an increase of 0.2%. Among them, the prices of industrial consumer goods changed from a 0.2% drop last month to an increase of 0.3%. Affected by the increase in raw material prices and other factors, the prices of cement, liquefied petroleum gas and cars have all increased by 0.6%-7.6%. In addition, the fees of some schools at the beginning of the new semester have been raised, and the price of education services has increased by 1.7%; after the end of the summer, the price of air tickets, travel agency fees and hotel accommodation has dropped by 9.9%, 3.3%, and 2.2%, respectively.
Prices of coal and energy-intensive industries are rising
In September, the national factory prices for industrial producers rose by 10.7% year-on-year, an increase of 1.2% from the previous month, and a month-on-month increase of 1.2%, an increase of 0.5% from the previous month.
According to Dong Lijuan, a senior statistician in the City Department of the National Bureau of Statistics, 36 of the 40 industrial sectors surveyed had price increases, an increase of 4 from the previous month. The price increase of major industries has expanded. Among them, the price of coal mining and washing industry increased by 74.9%, an increase of 17.8 percentage points from the previous month; the price of oil and natural gas extraction industry increased by 43.6%, an increase of 2.3 percentage points.
“The price increase of coal and high energy-consuming industries caused the PPI in September to hit a new high since the end of 1995 year-on-year.” Wu Chaoming pointed out that the price increase in the coal processing and coal mining industries contributed 41.7% of the month-on-month increase in PPI in September; at the same time, non-ferrous and ferrous metals Related energy-intensive industries such as smelting and rolling, cement, chemical raw materials and chemical products contributed 47.5% to the month-on-month PPI. On the whole, coal and high energy-consuming industries are the main reasons for the continued increase in PPI this month, with a contribution rate close to 90%.
In September, affected by strong demand and continued tight supply, the price of coal processing industry rose by 18.9% month-on-month, and the price of coal mining and washing industry rose by 12.1%, which in total affected the PPI increase by about 0.5%. Some energy-intensive industries have limited production and prices have risen more. Among them, the price of non-ferrous metal smelting and rolling processing industry increased by 2.9%, the price of non-metallic mineral products such as cement increased by 2.9%, and the price of chemical raw materials and chemical products manufacturing increased by 2%. , The price of ferrous metal smelting and rolling processing industry rose by 1.8%, which affected the PPI increase by about 0.57 percentage points in total.
Wu Chaoming analyzed that it is expected that the pattern of continued price increases in coal and high-energy-consuming industries in the short-term will continue, but the rate of increase may weaken on the margin. The main reason is that it is difficult to substantially alleviate supply constraints in the short term, or continue to push up coal prices. The current round of coal price increase is mainly caused by supply constraints. Although the power curtailment and production limit policy is expected to be revised marginally, the slowdown in early capital expenditures and the capacity clearance caused by the epidemic will continue to restrict the supply side, superimposing the long-term constraints of carbon neutrality goals. The contradiction between coal supply and demand may be difficult to alleviate in the short term. However, with the implementation of a series of policies to ensure supply and price stabilization and the marginal revision of the power and production restriction policies, the rate of increase in coal prices will tend to converge, and power supply will increase in an orderly manner. The restrictions on the market will tend to weaken, which is conducive to the stability of prices in related industries.
Wang Jun also said that the rise in the prices of coal and some products in high energy-consuming industries was the main driving force behind the year-on-year record highs of industrial producers’ ex-factory prices, which also widened the gap between PPI and CPI. At present, due to the increased control of policies, the subsequent continued upward momentum is insufficient, and it will gradually decline with the implementation of measures to ensure supply and stabilize prices. However, affected by rising crude oil and natural gas prices, the PPI will remain high for a period of time.
Future price increases are limited
Regarding the next CPI and PPI trends, Wang Jingwen, a senior researcher at Pangu Think Tank, believes that the key to determining the next stage of CPI performance is pork prices and base factors. From the perspective of pork prices, historically, if the pig-to-food ratio has returned to the range above 6:1, it will be as little as 14 weeks and as long as 70 weeks. Since September, the pig-to-grain ratio has continued to be below 6:1. As the stock of live pigs is still at a high level, it is difficult for temporary purchases and storage to reverse the downward trend of pork prices in the short term. It is expected that the trend of pork will remain weak during the year.
From the perspective of the base effect, due to the low year-on-year growth rate in November last year (-0.5%), it is expected that the CPI may rise in November this year. However, due to the overall decline in demand and the stable monetary policy, there is no basis for substantial price increases. It is estimated that the probability of CPI breaking through 2% in the second half of the year is unlikely.
Wu Chaoming expects that the CPI will show an overall upward trend during the year, but the increase will be moderate. Last year’s price changes will increase the tail-finding factors in October and November; service prices will continue to rise after the epidemic stabilizes; after excluding pork prices, the CPI and PPI are highly consistent, and the transmission of PPI to CPI will continue; pork prices will continue It will cause a greater drag on CPI, and the slowdown in domestic demand will result in a limited increase in CPI.
“It is expected that the central level of PPI in the fourth quarter will continue to rise. The probability of hitting a new high during the year in October is relatively high, and then the high level will fall back.” Wu Chaoming said, “The reason is that last year’s price changes were at the same level as in September. Quite, in the high range, it tends to go down thereafter; at the same time, the factors that led to this round of PPI upward will continue for some time. The tight supply leads to the high price of bulk commodities, and the structural upward momentum is strong; in addition, it is expected to increase the supply in the early period. The policy will serve as a buffer to the prices of coal and high energy-consuming products.”
“The price trend since the beginning of this year shows that due to the combination of uneven recovery, weaker demand and strong supply constraints, we are facing structural and phased industrial product inflation rather than full inflation.” Wang Jun said “Under the background of loose global liquidity and inflation, the PPI trend has greater uncertainty. Industrial product prices may continue to operate at a high level for a period of time, and inflationary pressures will not decrease in the future; consumer product prices are affected by food prices at the base. The effect of the effect of receding and the narrowing of the decline will rise slowly, but the inflationary pressure is not strong, and the previous government’s 3% control target will not be exceeded during the year, and it is expected to be controlled within 2%.”
Beijing Commercial Daily reporter Tao Feng Lu Yinling