Pork prices continue to fall, combined with lagging oil prices

Institutions predict that CPI may continue to fall or return to the "2 era" in May

  The National Bureau of Statistics will announce the May CPI data. Many institutions predict that due to the continued decline in pork prices and the lagging effect of oil prices, the CPI continued to decline in May, with a year-on-year increase of less than 3%, and officially returned to the "2 era". The year-on-year CPI has a year-on-year probability of going down quarter by quarter.

  Lu Zheng, chief economist of Industrial Bank, said that as temperatures rose, fresh vegetables went on the market in large quantities, and vegetable prices continued to fall in May. While the supply of live pigs is improving, catering consumption continues to be under pressure, affecting meat consumption demand and leading to a decline in pork prices. Therefore, the May CPI may fall to 2.6% year-on-year.

  "It is expected that the CPI will continue to fall to about 2.5% in May, and officially returned to the '2 era' driven by food prices." Zhang Yu, chief macro analyst of Huachuang Securities, pointed out that in terms of food items, the overall decline in the price of the food basket dragged the CPI trend. In terms of non-food items, international crude oil prices in May still did not return to the domestic refined oil regulation floor prices. Domestic oil prices failed to follow the international spot price increase, and residential hydropower fuel items and transportation fuel items are unlikely to increase month-on-month. However, the May holiday led to the restoration of consumer spending, and the year-on-year decline in non-food prices is expected to narrow.

  Hua Changchun, chief global economist at Guotai Junan Research Institute, believes that the May CPI year-on-year increase will drop to 2.8%. In terms of food prices, both the average prices of 28 key monitored vegetables and the prices of various types of meat have fallen further. With the resumption of work and the resumption of the market and the sufficient supply of grain and oil in the second quarter, the future probability of food continues to decline.

  "In terms of non-food prices, price divergence." Hua Changchun pointed out that crude oil prices rebounded significantly. As of the end of May, the spot price of British Brent crude oil was US$34.69 per barrel, a 74.25% increase from the previous month; WTI crude oil price was 35.49 The dollar/barrel has also increased by 88.38% month-on-month, but it is still below $40/barrel, so the protection mechanism will still be triggered and domestic oil prices will not be adjusted. The Keqiao Textile Price Index has declined for several weeks in a row, and transportation and communications CPI and medical prices continue to slow.

  Looking ahead, Xie Yaxuan, chief macro analyst of China Merchants Securities, believes that with the alleviation of the impact of the epidemic on the supply of commodities, the marginal recovery of pork production capacity, and the obvious fall in the base factor in the second half of the year, the CPI will remain in a downward trend throughout the year.

  "Pig prices and fruit prices are two variables that significantly affect CPI during the year." Zhang Jiqiang, deputy director of Huatai Securities Research Institute, believes that due to the better recovery of hog production capacity and the addition of base factors, the price of pigs will fall faster in the second half of this year. . At the same time, the price of fruit in the middle of the year may also fall faster than the previous year, which will help CPI fall.

  Reporter Ban Juanjuan reports from Beijing