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Due to factors such as increased consumer demand during the summer and rising food prices due to high temperatures and heavy rains, the CPI in July hit a new high since March this year.

Data released by the National Bureau of Statistics on the 9th showed that the consumer price index (CPI) rose by 0.5% year-on-year in July, an increase of 0.3 percentage points from the previous month; the ex-factory price index (PPI) of industrial products fell by 0.8% year-on-year, the same decline as the previous month.

Consumer demand continued to recover in July, and coupled with the impact of high temperature and rainfall in some areas, the national CPI turned from a decline to an increase on a month-on-month basis, and the year-on-year growth rate expanded.

From a month-on-month perspective, CPI rose 0.5% from a 0.2% drop last month, a relatively high increase in recent years. Among them, food prices rose 1.2% from a 0.6% drop last month, affecting the CPI by about 0.21 percentage points month-on-month. Among non-food items, the demand for summer travel was strong, with air tickets, tourism and hotel accommodation prices rising by 22.1%, 9.4% and 5.8% respectively, all of which were higher than the average level of the same period in the past decade, affecting the CPI by about 0.24 percentage points month-on-month, accounting for nearly half of the total CPI increase.

From a year-on-year perspective, CPI rose by 0.5%, an increase of 0.3 percentage points from the previous month. Among them, food prices remained unchanged from a decrease of 2.1% in the previous month. Non-food prices rose by 0.7%, a decrease of 0.1 percentage points from the previous month, affecting the year-on-year increase of CPI by about 0.54 percentage points.

Wang Qing, chief macro analyst at Orient Securities, analyzed that due to the effect of the reduction of pig production capacity since the second half of last year, pork prices continued to rise in July, and the year-on-year increase slightly expanded; at the same time, under the influence of rain and flood disasters, the year-on-year decline in vegetable prices narrowed significantly, and the decline in fruit prices also converged. The above factors boosted food prices that month, which was the main reason for the expansion of the CPI increase in July.

Regarding the CPI trend in the next stage,Tianfeng SecuritiesThe research report believes that the current demand for pork is weak and the price is mainly supported by supply, but the terminal's acceptance of high-priced pork may be limited. Short-term disturbances such as holding back and reluctance to sell may amplify future supply. There is not much room for further increases in pork prices, and the month-on-month improvement in CPI may be limited.

Wu Chaoming, deputy director of Caixin Research Institute, analyzed to China Business News that food prices will rise seasonally in the second half of the year, and with the contradiction between pork supply and demand being alleviated, the drag of food on CPI will tend to weaken in the future. Service prices benefit from the gradual smoothening of the domestic "employment-income-consumption" cycle and are expected to continue the trend of a mild recovery. However, it will take some time for residents' income and consumption expectations to recover, and the low inflation pattern will remain unchanged this year. Overall, the annual CPI center is expected to be around 0.4%, and it is expected to enter the "1" era by the end of the year.

In terms of PPI, in July, affected by factors such as insufficient market demand and downward prices of some international bulk commodities, PPI fell by 0.2% month-on-month and 0.8% year-on-year, the same decline as the previous month.

From a year-on-year perspective, PPI fell by 0.8%, the same as last month. Among them, the price of means of production fell by 0.7%, a decrease of 0.1 percentage point narrower than last month; the price of consumer goods fell by 1.0%, a decrease of 0.2 percentage point wider.

Among the major industries, prices in the non-metallic mineral products industry fell by 5.6%, prices in the ferrous metal smelting and rolling processing industry fell by 3.7%, prices in the electrical machinery and equipment manufacturing industry fell by 2.8%, prices in the agricultural and sideline food processing industry fell by 2.7%, prices in the computer, communications and other electronic equipment manufacturing industry fell by 2.6%, and prices in the automobile manufacturing industry fell by 2.1%. The above six industries are the main factors affecting the year-on-year decline in PPI, which together pulled down PPI by about 1.25 percentage points.

It is estimated that in the -0.8% year-on-year change in PPI in July, the lag effect was about 0.1 percentage point, compared with -0.1 percentage point in the previous month; the new impact of price changes this year was about -0.9 percentage point, compared with -0.7 percentage point in the previous month.

Wu Chaoming said that looking ahead to the second half of the year, the tail effect and the effectiveness of previous policies will push the PPI decline to continue to narrow, but the sluggish real estate market and the domestic strong supply and weak demand pattern will be difficult to change in the short term, and the recovery of new price increase factors of PPI may be slow. It is expected that the PPI may have to wait until the end of the year for it to turn positive, and it is not ruled out that it will take longer. The annual PPI growth is about -1.4%.

(Intern Cui Mengxin also contributed to this article)

(This article comes from China Business Network)