Pork and vegetable prices rise, CPI may rise for the sixth consecutive time
2024-08-11
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On the morning of the 9th, the National Bureau of Statistics will release the Consumer Price Index (CPI) for July 2024. The average forecast of multiple institutions shows that the CPI in July will increase by 0.3% year-on-year, a slight increase from the previous month.
CPI may rise for six consecutive years
Data from the National Bureau of Statistics showed that in June 2024, the national CPI fell by 0.2% month-on-month and rose by 0.2% year-on-year, marking the fifth consecutive month of year-on-year increases.
As for the CPI data for July that will be announced soon, Wind data shows that as of August 8, the average forecast of 12 institutions for the year-on-year increase in CPI in July was 0.3%. In terms of the forecast values, 5 were higher than 0.3%, 3 were 0.3%, and 4 were lower than 0.3%. The highest forecast value was 0.5% given by Huachuang Securities, and the lowest was 0.1% given by Nomura Orient International and Huatai Securities. If calculated according to the average forecast of the institutions, CPI has risen year-on-year for six consecutive months.
According to institutional forecasts, food prices may drive up the year-on-year CPI growth in July.
According to the monitoring of the Ministry of Agriculture and Rural Affairs, on July 31, the average price of pork in the national agricultural product wholesale market was 25.16 yuan/kg, and the average price of 28 kinds of vegetables was 5.07 yuan/kg, up 3.92% and 13.42% from 24.21 yuan/kg and 4.47 yuan/kg on June 28, respectively, and up 20.90% and 5.41% from 20.81 yuan/kg and 4.81 yuan/kg in the same period last year, respectively.
According to the analysis of CICC's macroeconomic report, the price of fresh vegetables has risen beyond seasonality due to heavy rainfall, the secondary fattening and the sentiment of holding back pigs have supported further increases in pork prices, and the year-on-year decline in non-food consumer goods may narrow due to the transmission of the previous PPI. The combination of these three factors may push up the year-on-year increase in CPI.
Zhang Jingjing's team at China Merchants Macro said that due to the weather, the mismatch between supply and demand of vegetables, fruits and eggs has improved significantly, and the year-on-year growth rate of prices has rebounded significantly. Pork prices continued to rise but the increase narrowed. The year-on-year growth rate of food items is likely to rebound. In terms of non-food items, residents' travel enthusiasm is still high recently, but there is still uncertainty as to whether the prices of offline service consumption can rebound positively. The rebound in refined oil prices provides some support. Considering that the tail effect of CPI in July fell to 0.0%, it has formed a certain drag on the year-on-year growth rate. Overall, CPI in July may rise by 0.3% year-on-year.
The Peking University National Economic Research Center reported that heavy rainfall affected the rise in food prices, and the increase in summer travel led to an increase in the prices of related services. It is expected that the CPI will increase by 0.4% year-on-year in July.
How will CPI trend in the future?
Regarding the price trend in the next stage, institutions generally believe that it will still rise moderately.
The Peking University National Economic Research Center analyzed that due to policies to promote the release of consumer demand and the low base effect, the CPI is on the rise as a whole. There is a certain pressure on the prices of consumer goods, while the price of services mainly depends on the recovery of demand. It is expected that the year-on-year growth rate of CPI in 2024 will be higher than the previous year, at about 0.4%.
Galaxy Securities' macroeconomic report believes that the CPI will rebound moderately from a low level in the second half of the year, and the resilience of service expenditure will support a slight upward trend in the core CPI. First, pork prices will generally rise in the second half of the year, but the possibility of a sharp increase is small; second, the resilience of service consumption expenditure will help push the core CPI upward; finally, the high base effect will gradually fade.
Gao Ruidong, chief macroeconomist of Everbright Securities, said that since the beginning of this year, driven by supply-side factors such as rising pork and oil prices, CPI has turned positive year-on-year, but due to factors such as insufficient consumer demand and low utilization of midstream production capacity, the height of CPI increase is still limited. It is expected to rise to around 1% in the fourth quarter driven by a low base.
