SMM News: in April, consumer price index (CPI) and producer price index (PPI) both rebounded from the same period last year. Among them, CPI rebounded to a half-year high, while PPI rose above expectations to a four-month high. The overall price level has risen. Analysts say CPI and PPI are still likely to rise in the future, but there is no significant risk of inflation, and full-year CPI growth will remain within the 3 per cent target.
CPI rose 2.5 per cent in April from a year earlier, up 0.2 percentage points from the previous month, according to data released yesterday by the National Bureau of Statistics, which ran in the "second era" for the second month in a row. Meanwhile, core CPI rose 1.7 per cent from a year earlier, down 0.1 percentage points from last month.
In an interview with the Shanghai Stock Exchange, Zhang Jun, chief economist of Morgan Stanley Huaxin Securities, said that the CPI uplink in April was mainly driven by food prices. As pig prices rise slightly and crude oil prices rise, CPI may rise slightly to about 2.6 per cent in May, and follow-up attention should be paid to the pull of pig prices and oil prices on CPI.
At a news conference held on April 23, the Ministry of Agriculture made it clear that pig prices have entered the rising cycle ahead of schedule, and it is expected that pork supply may tighten in the second half of the year and prices may rise significantly.
Affected by the epidemic of classical swine fever in Africa and other factors, pork prices rose 1.6 percent in April from a month earlier, a significant increase of 9.3 percentage points to 14.4 percent from a year earlier, the biggest increase since August 2016, according to the latest figures from the Bureau of Statistics.
"the rising cycle of pork prices has been formed and will be an important factor driving the rise in CPI this year. We do not rule out the possibility that pork prices will drive CPI growth by more than 3% year-on-year in individual months, but it is unlikely to remain at this level for a long time. " Liu Xuezhi, a senior researcher at the Bank of Communications Financial Research Center, said.
According to his analysis, with the change in consumption structure, the weight of pork prices in CPI has declined year by year, because the possibility of overall inflation caused by rising pork prices is very small, and the average increase in CPI for the whole year is expected to be less than 3 per cent.
Statistics also show that PPI rose 0.9 per cent in April from a year earlier, 0.5 percentage points higher than the previous month and rebounded for two months in a row, while PPI rose 0.3 per cent from a month earlier for the fourth month in a row.
In Liu Xuezhi's view, the rise in the price of means of production is the main reason for the rebound in PPI, indicating that industrial demand is in the process of improvement. PPI is likely to continue to rise in the future as infrastructure investment boosts demand. However, after May, the tail warping factor of PPI gradually decreased, and the effect on the uplift of PPI was weakened compared with the same period last year.
Li Chao, chief macro analyst at Huatai Securities, holds the same view. He believes that due to the impact of environmental protection actions in chemical and other areas, the month-on-month increase in PPI may be boosted. In the second and third quarters, most of the month-on-month PPI will maintain positive growth, and the year-on-year PPI increase will also show a quarterly recovery trend.
As far as monetary policy is concerned, Mr Zhang said there was no need to adjust monetary policy in the short term, given that core CPI, excluding food prices, remained stable and PPI growth remained low.