Market Performance - The Hang Seng Index (HSI) closed at 26,232, up 0.3% for the day and 2.3% year-to-date (YTD) [1] - The MSCI China index increased by 0.3%, with a YTD gain of 3.0% [1] - The KOSPI index showed a strong performance, rising 0.7% for the day and 8.8% YTD [1] Commodity Prices - Brent Crude oil prices rose to $63 per barrel, reflecting a 2.2% increase for the day and 4.1% YTD [2] - Gold prices reached $4,510 per ounce, up 0.7% for the day and 4.4% YTD [2] - Copper prices increased by 2.2% for the day, with a YTD gain of 4.6%, closing at $12,998 per ton [2] Economic Indicators - The US CPI YoY for December was reported at 2.7%, matching consensus expectations [3] - China's GDP YoY growth was recorded at 4.8%, slightly above the expected 4.5% [3] - The Core CPI in the US remained stable at 2.8% YoY, indicating consistent inflationary pressures [3] Sector Insights - H-share banking stocks are gaining attention from long-term investors, particularly in a low-interest-rate environment [8] - The H-share banking sector is expected to report positive gains in 2026, maintaining an OVERWEIGHT rating [9] - CIMC Enric's green methanol plant is projected to significantly reduce greenhouse gas emissions by 85%, tapping into a new market [12]

Overall Situation: Low-Level Bottoming - In December 2025, the price indicators continued to improve, with CPI year-on-year rising from 0.7% to 0.8%, and PPI narrowing from -2.2% to -1.9% [2][11] - For the year 2025, CPI is expected to be 0%, slightly lower than the 0.2% in 2023 and 2024, while PPI is projected at -2.6%, lower than -2.2% in 2024 [12][11] CPI: From General Weakness to Structural Improvement - CPI was reclassified into categories: food (approx. 19% weight), competitive goods (approx. 26%), competitive services (approx. 19%), rent (approx. 15%), and government-controlled goods and services (approx. 21%) [15][18] - The cumulative CPI growth for 2023-2024 averaged -0.1%, indicating a general price weakness influenced by production capacity cycles and domestic supply-demand imbalances [19][18] - In 2025, CPI cumulative growth is expected to be 0.8%, showing structural improvement, driven by rising prices in food (1.1%) and gold jewelry (68.5%) [20][21] PPI: Accelerated Decline Followed by Stabilization - In the first half of 2025, PPI showed a month-on-month decline of -0.3%, while in the second half, it stabilized with a month-on-month average of 0% [5][23] - The price of various industry chains, particularly in non-ferrous metals, is expected to improve due to macroeconomic factors and domestic capacity management [24][23] Outlook for 2026: Mild Year-on-Year Recovery - CPI and PPI are expected to see mild year-on-year recoveries, with CPI projected at approximately 0.8% and PPI at around -1% [26][27] - Potential drivers for CPI improvement include rising prices in food and competitive goods, particularly gold jewelry, and healthcare services [27][28] December 2025 Inflation Data Review - CPI rose from 0.7% to 0.8%, with food prices increasing from 0.2% to 1.1%, while energy prices fell from -3.4% to -3.8% [29][30] - Core CPI remained stable at 1.2%, with significant increases in gold jewelry prices and household goods [29][30]

Group 1: Report Title and General Information - The report is titled "Industrial Consumer Goods Drive Moderate Price Recovery - December 2025 CPI and PPI Review" [1] - The report was published on January 11, 2026 [10] Group 2: Report Highlights and Core Views - In December 2025, domestic prices improved unexpectedly supported by imported factors and pre - holiday consumption. Core CPI year - on - year growth remained at 1.2%, and the year - on - year decline of PPI narrowed [2] - In 2026, food CPI may still be dragged down by pig prices in the first half of the year, but the service sector is resilient, and the industrial consumer goods sector is supported by the "anti - involution" policy and the international metal price increase cycle. With the low - base effect, prices may continue a moderate recovery. It is neutrally expected that the year - on - year growth rate of PPI will turn positive in the fourth quarter [2] - This year, the bond market may operate in an environment of moderate price recovery. The long - term bond is expected to fluctuate weakly, with the 10 - year Treasury yield expected to fluctuate between 1.8% - 1.9%. The bond market's periodic recovery opportunity may come in the second half of the first quarter [2] Group 3: December 2025 Price Data - In December 2025, CPI rose 0.2% month - on - month and 0.8% year - on - year, with the year - on - year increase expanding by 0.1 percentage points compared with the previous month. Core CPI rose 1.2% year - on - year [7] - In December 2025, PPI rose 0.2% month - on - month and fell 1.9% year - on - year, with the year - on - year decline narrowing by 0.3 percentage points compared with the previous month [7] Group 4: Factors Affecting CPI Core CPI - Industrial consumer goods are the main support for core CPI, while service prices are stable. In December 2025, the year - on - year growth rate of core CPI remained at 1.2% for three consecutive months [11] - The year - on - year growth rate of industrial consumer goods (excluding energy) prices increased to 2.5% for six consecutive months, driving the year - on - year increase of CPI by about 0.63 percentage points. Gold jewelry prices rose 5.6% month - on - month due to rising international gold prices; copper and memory price increases drove household appliances and communication tools to rise 1.4% and 3% month - on - month respectively; the price decline of fuel cars and new - energy cars narrowed to 2.4% and 2.2% year - on - year respectively [11] - Service prices improved steadily, with the year - on - year growth rate slightly falling 0.1 percentage points to 0.6%. Among them, the month - on - month prices of household services and medical services were still stronger than the seasonal average [11] Overall CPI - The increase in food prices drove CPI to continue rising, while energy prices still dragged down CPI. In December 2025, CPI was stronger than the seasonal average month - on - month, and the year - on - year increase expanded by 0.1 percentage points to 0.8%, reaching the highest level since March 2023 [11] - Food prices rose 1.1% year - on - year, with the increase expanding by 0.9 percentage points compared with the previous month, driving the year - on - year increase of CPI by about 0.21 percentage points. Pre - holiday consumption demand pushed up the prices of fresh fruits and shrimps and crabs by 2.6% and 2.5% respectively. The drag of pork and egg prices on the year - on - year CPI decreased, but pig prices may remain low in the first half of this year [11] - Energy prices fell 3.8% year - on - year, with the decline expanding by 0.4 percentage points compared with the previous month. Affected by international oil price changes, domestic gasoline prices fell 1.2% month - on - month, and the year - on - year decline expanded to 8.4% [11] Group 5: Factors Affecting PPI - The continuous implementation of the "anti - involution" policy and the increase in international non - ferrous metal prices drove the month - on - month increase of PPI for three consecutive months, and the year - on - year decline narrowed. In December 2025, the month - on - month growth rate of PPI rebounded for three consecutive months, with the increase expanding by 0.1 percentage points to 0.2%. The year - on - year decline of PPI also narrowed by 0.3 percentage points to - 1.9% [11] - The year - on - year declines of both living materials and production materials narrowed. Production materials rose 0.3% month - on - month, while living materials remained flat month - on - month [11] - With the implementation of the "anti - involution" measures, the supply - demand structure of some industries improved, and the year - on - year price declines of the coal mining and washing, lithium - ion battery manufacturing, and photovoltaic industries narrowed [11] - The increase in international non - ferrous metal prices drove the prices of non - ferrous metal mining and dressing and non - ferrous metal smelting and rolling processing industries to rise 3.7% and 2.8% month - on - month respectively, with the increases expanding by 1.1 and 0.7 percentage points compared with the previous month [11] Group 6: Upstream and Downstream Price Trends - The prices of upstream mining industries continued to rise, while the prices of mid - and downstream industries were stable. The price game may have been transmitted to the downstream. The substantial implementation of the "anti - involution" policy drove the continuous price recovery of industries such as coal and photovoltaic, but some key industries for capacity management did not improve significantly [11] - Among upstream industries, the prices of coal mining and washing and non - ferrous metal mining and dressing increased for many months, while the year - on - year price growth rates of industries such as petroleum, coal and other fuel processing (- 7.9%) and non - metallic mineral products (- 6.8%) were still declining [11] - The month - on - month price growth rates of industries such as general equipment manufacturing, automobile manufacturing, and computer, communication and other electronic equipment manufacturing were basically flat or fluctuated slightly, and the upstream prices of most industries had not been smoothly transmitted to the mid - and downstream raw material processing and manufacturing industries [11] Group 7: Future Outlook - In 2026, food CPI may still be dragged down by pig prices in the first half of the year, but the service sector is resilient, and the industrial consumer goods sector is supported by the "anti - involution" policy and the international metal price increase cycle. With the low - base effect, prices may continue a moderate recovery. It is neutrally expected that the year - on - year growth rate of PPI will turn positive in the fourth quarter [11] - This year, the bond market may operate in an environment of moderate price recovery. The long - term bond is expected to fluctuate weakly, with the 10 - year and 30 - year Treasury yields expected to adjust to around 1.9% and 2.4% respectively. The bond market's periodic recovery opportunity may come in the second half of the first quarter [11]

Group 1: Inflation Overview - In December 2025, CPI increased year-on-year from 0.7% to 0.8%, while core CPI remained stable at 1.2%[2] - PPI narrowed its year-on-year decline from -2.2% to -1.9%[2] - The GDP deflator index for Q4 2025 is expected to be around -0.4%, with earlier quarters at -0.8%, -1.2%, and -1%[2] Group 2: CPI Analysis - The cumulative CPI increase for 2025 is 0.8%, a significant recovery compared to the average -0.1% in 2023-24[5] - Food prices rose by 1.1% in 2025, driven by increases in fruits, vegetables, and beef[5] - Gold jewelry prices surged by 68.5%, contributing to the overall CPI improvement[5] Group 3: PPI Trends - In the first half of 2025, PPI experienced a monthly average decline of -0.3%, compared to -0.2% in 2023 and 2024[6] - The second half of 2025 saw PPI stabilize with a monthly average of 0%, indicating a recovery in various industry chains[6] - Factors influencing PPI include global recession fears due to U.S. tariff policies and ongoing adjustments in the domestic real estate market[6] Group 4: 2026 Outlook - CPI is projected to rise by approximately 0.8% in 2026, with a technical adjustment of 0.1 percentage points due to base effects[10] - PPI is expected to decline by about -1%, with an upward adjustment of 0.4 percentage points due to price increases in the non-ferrous sector[10] - Potential upward risks for CPI include increased consumer subsidies and improved service supply in the economy[10]

Core Insights - The Consumer Price Index (CPI) for December 2025 is projected to increase by 0.8% year-on-year, while the Producer Price Index (PPI) is expected to decline by 2.6% year-on-year, indicating a mixed economic outlook for 2025 [1][2][3] CPI Analysis - CPI has shown a continuous recovery for four months, reaching a new high since March 2023, with core CPI remaining above 1% for the same duration [1][2] - In December, the CPI increased by 0.1 percentage points to 0.8%, driven by rising food and core consumer goods prices, while energy prices remained weak [6][7] - The annual CPI for 2025 is expected to average around 0%, the lowest level since 2009, primarily due to weak food and energy prices [3][4] PPI Analysis - The PPI for December is projected at -1.9%, with a narrowing decline compared to the previous month, and a month-on-month increase of 0.2% [3][12] - The annual PPI for 2025 is expected to average -2.6%, the second-lowest since 2016, influenced by weak demand and excess capacity in various sectors [4][5] - Key drivers for PPI include the recovery in the non-ferrous metals sector and the impact of "anti-involution" policies, while the oil and petrochemical sectors continue to exert downward pressure [12][13] 2026 Outlook - For 2026, CPI is forecasted to slightly increase to 0.7%, supported by policies such as "old-for-new" exchanges and rising gold prices, while PPI is expected to stabilize at -0.4% [5][6] - Factors influencing the 2026 outlook include potential price increases in coal, steel, and lithium due to demand from energy storage and AI-related sectors [6][12]

Core Insights - In December 2025, the Consumer Price Index (CPI) increased by 0.8% year-on-year, marking the highest growth since March 2023, primarily driven by rising food prices [3][6] - The Producer Price Index (PPI) saw a month-on-month increase of 0.2% and a year-on-year decrease of 1.9%, with the decline in PPI narrowing compared to the previous month [4][15] CPI Analysis - The CPI rose by 0.2% month-on-month, reversing a previous decline of 0.1%, influenced by increased demand for consumer goods as the New Year approached [2] - Core CPI, excluding food and energy, increased by 1.2% year-on-year, maintaining a growth rate above 1% for four consecutive months [3] - Food prices rose by 1.1% year-on-year, with significant increases in fresh vegetables (18.2%) and fresh fruits (4.4%), contributing to the overall CPI increase [3][9] PPI Analysis - The PPI's month-on-month increase of 0.2% marks the third consecutive month of growth, with improvements in supply-demand dynamics leading to price increases in certain sectors [4][5] - Year-on-year, the PPI decline of 1.9% reflects a narrowing of the decrease, with specific industries like coal mining and lithium-ion battery manufacturing showing price increases [5][15] - Input prices for industrial producers decreased by 2.1% year-on-year, with notable declines in various raw materials, while prices for non-ferrous metals increased significantly [19][20] Price Changes by Category - In December, food and beverage prices rose by 0.8% year-on-year, contributing approximately 0.24 percentage points to the CPI [9] - Among various categories, prices for other goods and services saw significant increases, with household services rising by 1.2% and other consumer goods increasing by 17.4% [9][11] - Conversely, transportation and housing prices experienced declines, with transportation costs decreasing by 2.6% year-on-year [9][14]

Group 1: CPI Analysis - In December 2025, the Consumer Price Index (CPI) increased by 0.8% year-on-year and 0.2% month-on-month, with the annual CPI remaining stable compared to the previous year [1][2] - The rise in CPI was primarily driven by an increase in food prices, which rose by 1.1% year-on-year, contributing approximately 0.17 percentage points to the CPI increase [2][3] - Core CPI, excluding food and energy, rose by 1.2% year-on-year, maintaining a growth rate above 1% for four consecutive months [3] Group 2: PPI Analysis - The Producer Price Index (PPI) increased by 0.2% month-on-month in December 2025, marking the third consecutive month of growth, while the year-on-year decline narrowed to 1.9% [4][6] - The month-on-month PPI increase was influenced by improved supply-demand dynamics and seasonal demand increases in certain industries, such as coal and gas production [4][5] - Input factors led to a divergence in price trends for domestic non-ferrous metals and oil-related industries, with non-ferrous metal prices rising due to international price increases, while oil-related prices fell due to declining international oil prices [5][6]

Group 1 - The core viewpoint of the articles indicates that the Consumer Price Index (CPI) has shown a moderate recovery, with a year-on-year increase of 0.8% in December 2025, marking the highest level since March 2023 [2][6][7] - The increase in CPI is significantly driven by food prices, particularly fresh vegetables and fruits, which saw year-on-year price increases of 18.2% and 4.4%, respectively [2][3] - The Producer Price Index (PPI) has shown a narrowing year-on-year decline of 1.9% in December, indicating positive changes in certain industries due to improved market competition [4][5] Group 2 - The core CPI, excluding food and energy, rose by 1.2%, maintaining a growth rate above 1% for four consecutive months, reflecting a stable recovery in demand [3][6] - The overall price stability in 2025, with CPI remaining flat year-on-year and PPI declining by 2.6%, suggests that market supply and demand relationships are improving [6][7] - Experts predict that in 2026, with more proactive macroeconomic policies, CPI is expected to rise steadily, supported by recovering consumer demand and structural adjustments in the economy [7][8]

Group 1 - In December 2025, the Consumer Price Index (CPI) increased by 0.2% month-on-month and 0.8% year-on-year, while the Producer Price Index (PPI) rose by 0.2% month-on-month but decreased by 1.9% year-on-year [1][2] - The CPI's year-on-year growth rate expanded by 0.1 percentage points compared to the previous month, reaching the highest level since March 2023, primarily driven by an increase in food prices, which rose by 1.1% [1][3] - Key food items such as fresh vegetables and fruits saw price increases of 18.2% and 4.4%, respectively, contributing approximately 0.16 percentage points to the CPI's year-on-year increase [1][2] Group 2 - The month-on-month CPI increase was influenced by rising prices of industrial consumer goods, excluding energy, which rose by 0.6%, contributing about 0.16 percentage points to the CPI [2] - The PPI's year-on-year decline of 1.9% showed a narrowing of the decline by 0.3 percentage points from the previous month, with significant price reductions in coal mining and lithium-ion battery manufacturing [3] - Prices in sectors such as external storage devices and biomass liquid fuels increased by 15.3% and 9.0%, respectively, indicating a growth in new productive forces [3]

Core Insights - The inflation data for December 2025 shows a year-on-year CPI increase of 0.8%, up from 0.7% in the previous month, and a PPI decrease of -1.9%, improving from -2.2% [1][4] CPI Analysis - The CPI increase is primarily driven by rising gold prices, which have a significant impact on core goods CPI, while excluding gold, the core goods CPI remains low [2][11] - The food CPI rose by 1.1%, with a notable increase of 0.9 percentage points from the previous month, largely due to supply constraints affecting fresh vegetables and fruits [16][38] - The core service CPI decreased by 0.1 percentage points to 1%, influenced by weak rental demand, which has led to a decline in rental prices [22][48] PPI Analysis - The PPI increase is mainly attributed to rising copper prices, which rose by 7.9% month-on-month, contributing positively to the PPI [1][4] - Other commodity prices and downstream PPI performance remain weak, with the overall PPI showing a month-on-month increase of 0.2% [1][4] - The decline in international oil prices negatively impacted domestic oil prices, contributing to a PPI decrease of -0.05% [1][4] Future Outlook - The effectiveness of anti-involution policies in stimulating downstream prices is crucial for future PPI performance, as commodity prices have only explained about 30% of PPI fluctuations in the past three years [30] - The high gold prices and improvements in service consumption may support a rise in core CPI, but the high base effect from the Spring Festival may limit the CPI increase in January [30]