7月物价解读：7月物价呈现积极信号

Report Industry Investment Rating No relevant content provided. Core View of the Report In July, the CPI turned from flat to rising month - on - month, mainly due to higher service prices during the summer travel season, rising international oil and gold prices, and increased demand driven by replacement policies. The PPI's month - on - month decline narrowed, and its year - on - year growth stopped falling. Overall, with policy promotion and external factors, prices improved marginally in July. However, the price improvement in the upstream of the industrial chain was significantly better than that in the mid - and downstream. Mid - and downstream enterprises' price increases were restricted by insufficient effective demand. Anti - involution policies cannot boost prices overnight, and "stabilizing prices, reducing production capacity, and increasing demand" need to be coordinated. In the short term, with the continuous implementation of replacement and anti - involution policies, domestic prices are expected to recover steadily [3][35]. Summary by Relevant Catalogs 1. Service and Industrial Consumer Goods Prices Rise, CPI Month - on - Month Exceeds Seasonal Improvement - The CPI was flat year - on - year, rising 0.4% month - on - month after a 0.1% decline last month. Its month - on - month growth was better than the seasonal average [11]. - The month - on - month increase in CPI beyond the seasonal level was mainly driven by rising service and industrial consumer goods prices. During the summer travel season, service prices rose 0.6% month - on - month, contributing about 0.26 pct to the CPI increase. International oil price hikes and replacement policies led to a 0.5% month - on - month increase in industrial consumer goods prices, contributing about 0.17 pct to the CPI increase [11]. - The carry - over effect turned negative, and the negative impact on the CPI year - on - year reading from the carry - over effect will expand from August to September [12]. - The year - on - year increase in the core CPI has been expanding for three consecutive months, with the highest month - on - month increase this year, mainly affected by rising prices of gold and platinum jewelry and services [14]. - Among the eight major categories, service - related items such as transportation, communication, education, culture, entertainment, and other supplies and services had relatively large month - on - month increases, while food and tobacco decreased both month - on - month and year - on - year [16]. - Food prices declined more than the seasonal average, dragging the CPI from rising to flat. In July, food prices fell 0.2% month - on - month, and the year - on - year decline widened, mainly due to high base prices last year [17]. - Non - food prices rose more than the seasonal average, supported by the summer travel season, rising international oil prices, and policies to boost domestic demand, which was the main factor for the CPI to turn from decline to increase month - on - month [20]. 2. Raw Material and Energy Mining and Processing Prices Improve, PPI Month - on - Month Decline Narrows - The PPI was flat year - on - year, and its month - on - month decline narrowed. In July, the PPI decreased 3.6% year - on - year, with the same decline as last month, and 0.2% month - on - month, with a 0.2 pct narrower decline than last month [25]. - The negative impact of the carry - over effect on the PPI weakened. In August, the PPI carry - over factor rose to - 0.7%, and from September to December, it will be in the range of 0 to - 0.1%. With the continuous release of policies to expand domestic demand and combat involution, the year - on - year decline in PPI may narrow significantly [27]. - The month - on - month decline in production material prices narrowed, while the decline in consumer goods prices widened [28]. - By industry, industries such as oil and gas extraction, fuel processing, and non - ferrous metal mining and processing had relatively large month - on - month increases, while industries such as coal, ferrous metal ore, and non - metallic mineral mining had relatively large month - on - month decreases. Overall, industrial product prices in most industries still declined, but some upstream industries showed obvious improvements [30]. - The decline in the PPI - CPI gap narrowed, but mid - and downstream industrial enterprises still faced significant pressure, mainly due to rising upstream prices, falling or stagnant downstream prices, and insufficient endogenous consumer demand [34]. 3. Conclusion: Positive Signals in July's Prices In July, the CPI turned from flat to rising month - on - month, and the PPI's month - on - month decline narrowed. Overall, prices improved marginally in July. However, the price improvement in the upstream was better than that in the mid - and downstream. Anti - involution policies need to be coordinated with "stabilizing prices, reducing production capacity, and increasing demand." In the short term, domestic prices are expected to recover steadily with continuous policy implementation [35].