1. Report Industry Investment Rating No information provided in the content. 2. Core View of the Report - The price level in 2026 is likely to continue to recover at a low level, with PPI recovering faster than CPI. The upward momentum of prices mainly comes from three aspects: the upward movement of oil prices provides phased support for upstream prices, the drag of pork prices on the CPI food item is expected to gradually converge, and the continuous implementation of the policy of increasing residents' income provides marginal support for service prices and core CPI. Overall, CPI will fluctuate at a low level throughout the year, while PPI is expected to turn positive and then stabilize [7][36]. 3. Summary According to Relevant Catalogs 3.1 Technical Factors: CPI Weight Adjustment Has Limited Impact on Inflation Readings - In 2026, the CPI base period was rotated, with updated statistical caliber and adjusted sub - item weights, which may affect the inflation expectation for the year. The dominant items of CPI are still concentrated in food and housing, but the importance of transportation and service - related items is increasing [13][14]. - The weight of pork in the middle - category sub - items may be reduced, while the weight of energy consumption may be increased. The impact of pork consumption on statistical readings may be weakened, but the influence cannot be ignored due to the large price elasticity of pork. The sensitivity of the transmission of international oil prices and travel costs to domestic inflation may be enhanced [15]. 3.2 Reversal Factors: The Pig Cycle and Pork Prices May Reverse - The decline in pork prices is still the main drag on current food inflation, but supply contraction signals are gradually accumulating. If capacity reduction continues and the year - on - year decline in pork prices significantly converges, the drag of the food item on CPI may gradually weaken, and the impact of pork prices on inflation is expected to shift from a negative to a phased positive one [18]. - The bottom characteristics of pork prices are gradually emerging. With the continuous implementation of regulatory policies, the supply side may experience further capacity reduction. Deep losses have become the core driving force for capacity reduction, and the downward space for pork prices is narrowing. The pig cycle has entered the bottom transition stage, and the probability of "low at the beginning and stable later" for pork prices in 2026 is high [20][22]. 3.3 Input Factors: The Transmission and Impact of Crude Oil Prices in Extreme Scenarios - Geopolitical tensions and market risk - preference fluctuations have jointly driven the recent rise in international oil prices. The interruption of the shipping channel in the Strait of Hormuz and the risk premium have pushed up oil prices. The domestic refined - oil price is directly linked to international oil prices, which exerts a certain input - type inflation pressure on CPI [25][26]. - The transmission of oil prices to PPI has started but has not fully unfolded. The intensity of this round of impact is expected to be weaker than the previous one. Geopolitical factors are the core variables determining the evolution of oil prices and inflation [29]. 3.4 Potential Factors: Pay Attention to the Intensity and Impact of the "Residents' Income - Increasing Plan" - Increasing residents' income has become an important measure to expand domestic demand. Policies are focusing on promoting wage - based, transfer, property, and business income. Income - improvement expectations are more likely to be reflected in the recovery of service consumption, which will support core CPI and service CPI more directly [30][34]. 3.5 Inflation Trading: Anticipatory Trading Has Been Conducted, but Real - World Data Is Difficult to Fulfill - It is expected that the price level will recover at a low level in 2026, with PPI recovering faster than CPI. CPI will show a pattern of "small fluctuations at a low level" throughout the year, while PPI may rise rapidly, turn positive, and then stabilize. The current inflation recovery is more phased and structural, and it is not enough to lead to a long - term return of inflation pressure and a significant upward risk in the bond market [36][39].