CPI,PPI
The CPI in April was 0.3% year-on-year, compared with 0.1% in the previous month, higher than the market expectation of 0.2%, and the recovery of tourism services and the sharp rise in gold prices boosted the CPI reading. In terms of sub-items, the prices of major sub-items in food continued to fall seasonally, but the decline narrowed significantly, and the overall sufficient market supply was the main reason. In terms of non-food products, gasoline prices rebounded in line with crude oil prices, vehicle prices continued to decline month-on-month, and fierce competition in the automotive industry continued. The price of the service industry was slightly stronger than the seasonal pattern month-on-month, the price of tourism rebounded moderately due to the impact of the small and long holiday, and the sharp rise in gold prices boosted the price of related jewelry. Looking ahead, the future CPI year-on-year reading may show low fluctuations, and then rise moderately.
In April, the PPI recorded a year-on-year increase of -2.5%, up 0.3 percentage points from the previous month, and the PPI fell from -0.1% to -0.2% month-on-month. In terms of industrial product prices, the prices of major commodities continued to diverge, and the prices of non-ferrous metals increased significantly. The upstream of black commodities also diverged, and crude oil gradually returned to fundamentals due to the easing of geopolitical tensions. Looking ahead, the combination of increased crude oil supply and low downstream refining margins is driving a short-term downward revision in oil prices.
Event: April 2024 CPI was 0.3% year-on-year, the previous value was 0.1%, and the market expected 0.2%. PPI -2.5% year-on-year, the previous value -2.8%, and the market expectation -2.3%. Comments: April's CPI was slightly higher than expected year-on-year, with a rebound in travel services and a surge in gold prices boosting the CPI reading. PPI fell slightly month-on-month, and rose slightly year-on-year due to base reasons, non-ferrous metal prices performed strongly, and domestic priced commodities were differentiated. 1. CPI: Tourism picks up and gold prices rise CPI recorded 0.3% year-on-year in April, up 0.2 percentage points from the previous month, higher than market expectations. The rebound in tourism services and the sharp rise in gold prices boosted the CPI reading. The CPI rose from -1.0% to 0.1% MoM, of which food prices rose from -3.2% to -2.7%, consumer goods prices rose from -0.9% MoM to Unchanged, and service prices rose from -1.1% to 0.8% MoM. Core CPI rose from -0.6% to 0.2% m/m and from 0.6% y/y to 0.7%.
1.1 Food prices fell slightly In April, all food items continued to decline due to seasonal factors, but the magnitude narrowed significantly. In April, the CPI food, tobacco and alcohol items rose from -2.2% month-on-month to -0.7%, and the year-on-year increase was unchanged from -2.7% in the previous month. The market supply was relatively sufficient, and the prices of fresh vegetables, shrimp and crabs, beef, eggs and fresh fruits decreased by 3.7%, 2.8%, 2.7%, 2.3% and 2.0% respectively. Looking ahead, pig prices are expected to usher in a recovery in the peak season in the second half of the year, and the current divergence between piglet prices and pigs is further intensified, and pig farmers continue to seize the expectation of peak season price recovery.
1.2 Divergence in transport and fuel prices In the non-food sector, transport and fuel prices diverged month-on-month. In April, the CPI for transportation and communication items rose from -1.4% to 1.0% month-on-month, of which the CPI for transportation fuel items rose from 1.1% to 2.9% month-on-month, while the price of transportation continued to decline, rising from -0.7% to -0.6% month-on-month. Looking ahead, the overcapacity of the automotive industry still needs to be resolved, and the international trade environment is also an important factor affecting the price trend of transportation in the future.
In the services sector, prices in the services sector were slightly stronger than the seasonal pattern in April, or may have benefited in part from a deeper correction in prices. Service prices rebounded from -1.1% to 0.3% month-on-month in April, while air tickets, transportation rental fees, hotel accommodation and tourism prices all increased by 15.3%, 9.0%, 4.0% and 2.7% month-on-month, respectively, and overall tourism prices increased from -14.2% to 2.7% month-on-month. In addition, affected by the sharp rise in international gold prices, the price of domestic gold jewelry rose by 8.7%, driving other supplies and services to rise by 2.0% month-on-month.
Looking ahead, the overall CPI is still in a moderate recovery stage year-on-year. In terms of food prices, the pig breeding industry has entered the deep water area, and with the increase of production capacity time, the supply and demand pattern of the pig industry is expected to improve, and the judgment that pork prices will remain volatile and rising in 2024 is currently maintained. In terms of crude oil, referring to the view of the foreign exchange commodity team of Henyep Research, the geopolitical tension in early April overdrew the gains that the fundamentals could support, and the subsequent downward revision of oil prices was needed to alleviate the sluggish global refining profits. 2. PPI: Non-ferrous metals have risen significantly In terms of industrial product prices, the prices of major commodities continue to show differentiation, the prices of non-ferrous metals have increased significantly, and domestic commodities are relatively weak. In April, the PPI recorded a year-on-year increase of -2.5%, up 0.3 percentage points from the previous month, and the PPI fell from -0.1% to -0.2% month-on-month. In April, the prices of major industrial products continued to diverge, and the prices of black commodities also showed differentiation, with coking coal, iron ore and rebar -2.4%, 4.9% and -0.7% month-on-month respectively. Non-ferrous metals performed strongly, with copper and aluminum 9.3% and 12.4% month-on-month respectively. Crude oil prices fell back from their highs to 4.9% month-on-month due to geopolitical tensions in the Middle East. The month-on-month decline in PPI in April was mainly affected by the phased decline in demand from some domestic industries.
2.1 Nonferrous building materials: intensified differentiation In April, the upstream prices of the black series were differentiated, and the downstream products were relatively stable, but the PPI-related subjects lagged behind the overall price decline. In the PPI, ferrous metal mining options decreased from -2.5% to -5.8% month-on-month, and ferrous metal processing items decreased from -1.2% to -2.5% month-on-month. At the beginning of April, the National Development and Reform Commission and the Ministry of Industry and Information Technology conducted research and deployment on the regulation and control of crude steel output in 2024, and some steel mills may have preemptive behavior. In terms of non-metallic minerals, non-metallic mineral products in PPI fell from -0.5% to -1.0% month-on-month, and cement and glass prices fluctuated at low levels due to weak relative demand.
In terms of non-ferrous metals, PPI non-ferrous metal-related subjects strengthened month-on-month in April. The non-ferrous mining and dressing sub-item of PPI increased sharply from 0.4% to 3.4% month-on-month, and the non-ferrous smelting sub-item increased from 0.6% to 3.2% month-on-month.
2.2 Energy Prices: PPI-related Subjects Continue to Rise Following International Oil Prices In April, international energy prices continued to rise month-on-month. PPI oil and gas extraction items increased from 1.1% to 3.4% month-on-month, and PPI oil processing items increased from 0.2% to 1.0% month-on-month. As geopolitical events in the Middle East eased, international energy prices gradually reviewed fundamentals in April. According to the research of the Foreign Exchange Commodities Department of Henyep Research, the EIA raised the growth rate of U.S. crude oil production in 2024 in April, and the actual implementation of U.S. sanctions on Iran will come after the U.S. election.
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