CPI picks up in July due to the rises of food and service price

Investment Rating - The report maintains a forecast that the annual average growth of CPI is likely to be around 0.5% in 2024 and 1.5% in 2025 [2] Core Insights - The Consumer Price Index (CPI) increased from 0.2% in June to 0.5% in July, surpassing market expectations, while core CPI growth decreased from 0.6% to 0.4% [2] - The CPI growth was supported by a low base effect from the previous year, particularly in food prices, which saw a recovery due to rising pork prices [2] - The report anticipates a gradual recovery in CPI growth, projecting it to reach around 1.1% in 4Q24, driven by food price recovery and policies aimed at boosting durable goods consumption [2] Summary by Sections CPI Analysis - In the first seven months of 2024, the CPI index rose by 0.2%, and core CPI increased by 0.6% [2] - The food price index in July remained unchanged year-on-year, marking an end to a 12-month deflationary period [2] - Month-on-month, the CPI index grew by 0.5% in July, compared to an average of 0.2% from 2010 to 2019 [2] Factors Influencing CPI - The rainy season affected the supply of fresh vegetables and fruits, leading to a 9.3% month-on-month increase in fresh vegetable prices [2] - Travel prices surged by 9.4% month-on-month in July, indicating a recovery in travel consumption [2] - The downward pressure on CPI was attributed to declining auto prices and weak rent CPI, which fell by 0.3% in July [2] Producer Price Index (PPI) Insights - The Producer Price Index (PPI) growth declined by 0.8% year-on-year and 0.2% month-on-month in July [4] - The report notes that the recovery of PPI growth was milder than expected, with challenges stemming from weak property investment and industrial competition [4] - The PPI growth may face further declines in the coming months due to base effects [4]