CPI Rose 2.5% In June, PPI Bottomed Up And Released Warming Signal

On July 9, the National Bureau of statistics released data showing that the year-on-year increase of the national consumer price index (CPI) expanded in June, while the producer price index (PPI) of industrial producers turned from negative to positive, and the year-on-year decline narrowed.

Specifically, CPI rose by 2.5% year-on-year, 0.1 percentage point higher than the previous month. Among them, the impact of food prices on CPI rose by about 2.24 percentage points, which was still the main driving force. The core CPI, excluding food and energy prices, rose 0.9% year-on-year, down 0.2 percentage points from the previous month.

Dong Lijuan, a senior statistician at the city Department of the National Bureau of statistics, said that due to factors such as the slow down of pig production, strict requirements for epidemic prevention deployment and reduced import volume, the supply of pork was tight. At the same time, the demand for catering and group consumption rebounded. Pork prices fell by 8.1% last month to rise by 3.6%. At the same time, floods and floods occurred in many places in China, and the clustering epidemic situation appeared in Beijing Xinfadi market, resulting in short-term shortage of vegetables in some areas. Fresh vegetable prices decreased by 12.5% last month to increased by 2.8%.

Ying Xiwen, a macro analyst at the minyin think tank, said that the recurrence of the epidemic situation in Beijing, the continuous rainfall in the southern region, and the rebound in pork prices were the influencing factors for the end of the five consecutive month decline in the year-on-year growth rate of CPI. Zhang Deli, chief Macro Analyst of YueKai securities, told reporters that what needs to be seen is that the core CPI continues to fall by 0.9% year-on-year, reflecting that the current pattern of oversupply in the economy has not changed and that demand should be stabilized in the future.

In terms of PPI, the month on month PPI rose from 0.4% in June to 0.4% in June, and the prices of means of production and means of living both changed from decline to increase. On a year-on-year basis, PPI was still in a negative value, but the decline rate was 0.7 percentage points narrower than that of the previous month, which was the first time that the year-on-year decline of PPI has narrowed since February.

Dong Lijuan also said that in terms of the 40 industrial sectors surveyed, 22 had price increases, an increase of 12 over the previous month. The year-on-year decrease in prices of major industries was narrowed.

Wu chaoming, vice president of Caixin Research Institute, told reporters that he followed the logic of "PPI looking at global demand and global demand looking at China". With the support of the policy of returning to work and production and monetary and financial funds, domestic industrial demand rebounded rapidly. The growth rate of industrial added value, infrastructure investment, real estate investment and other major indicators turned from negative to positive in the same month. In particular, the growth rate of infrastructure investment reached 10.9% in May. In June, the month on month change of PPI was supported by real economic demand.

Zhang Deli said that the positive month on month PPI was mainly contributed by upstream and midstream industries, which was related to the recovery of international commodity prices, the steady recovery of domestic manufacturing industry and the continuous improvement of terminal demand. PPI turned positive on a month on month basis, which also reflected the economic recovery from the side.

In the second half of the year, the reporter's expectation of downward trend of CPI is still supported by institutions. Wu chaoming said: first, last year's high food price base, especially pork price, led to a lower year-on-year growth rate. Although it is expected that the supply gap will still exist in the third quarter due to the impact of supply and demand and changes in the pig breeding cycle, the pork price will still fluctuate and rise at a high level, but last year's base is too high, which will not change the judgment of downward growth rate on a year-on-year basis; second, the epidemic situation Under the impact, although consumer demand will pick up quarter by quarter, it is generally weak, which is also the reason for restraining the rise of CPI; third, domestic demand and economic growth will be in a period of rapid rise in the second half of the year, and the real demand will support the CPI in the fourth quarter.

Analysts believe PPI decline in the second half of the year will slowly narrow. Wu chaoming said that the logic behind it is still the improvement of domestic real economic demand. The series of stimulus policies and a large amount of funds invested in the first half of the year will focus on and show remarkable effect in the second half of the year to promote the recovery of demand, forming a pattern of "infrastructure investment leading, real estate accompanying and investment pulling" economic recovery. However, there are also interference from the spread of overseas epidemic situation and demand recovery less than expected.

In terms of monetary policy, Ying Xi Wen said that the current inflation expectations have stabilized and social demand has recovered, but the future epidemic situation is still uncertain. We should maintain the loose pace of monetary policy, appropriately reserve policy space, and focus on dredging the transmission mechanism of monetary policy.