📊 Factory-gate prices rose 5.7%, while consumer prices rose just 0.7%
At 9:30 this morning, the National Bureau of Statistics released two sets of figures moving in opposite directions.
Industrial producer prices rose 5.7% year over year in October, up 0.7 percentage points from September’s 5.0% and the highest since July 2022. They accelerated for the third month in a row. Month over month, they rose 0.7%. All the price increases were upstream: coal mining rose 36.6%, oil and gas extraction 35.0%, and petroleum and coal processing 29.9%.
The consumer price index, released the same day, rose just 0.7% year over year, below the market forecast of 0.8% and last month’s 0.9%. Month over month, it was unchanged. Food prices fell 2.9%, fresh vegetables fell 16.9%, and pork fell 8.6%. Core CPI was 0.8%, a nine-month low.
Put the two together and the gap is 5.0 percentage points. It was 4.1 in September. The gap is still widening. Prices are rising upstream, but there’s no one to pass them on to downstream.
A closer look reveals two more telling figures. The biggest support for CPI came from gasoline, up 22.4% year over year and contributing 0.63 percentage points on its own. The portion of oil-price increases driven by the war has already made its way from wholesale to retail. On the other hand, data storage equipment rose 45.4%, tablets 29.3%, computers 23.0%, and mobile phones 16.7%. Together, these four categories added 0.26 percentage points to CPI. The memory chips snapped up by AI are already showing up on consumers’ shopping lists.
Gold jewelry is moving in the opposite direction. Its retail price fell 5.9% month over month in October, with the decline widening by a further 3.8 percentage points from September. Its year-over-year increase narrowed from 22.5% the previous month to 4.5%. International gold prices briefly fell below 4,000 during the month. Store prices followed. Today, COMEX is back at 4,129.9. The quoted gold price and business at the counter are no longer moving in lockstep.
Markets barely reacted. The Shanghai Composite rose 0.48% to 3,665.94. BTC is at 74,807, down 40.7% from 126,199 on October 6 last year; ETH is at 2,139, down 4.3%. The S&P 500 fell 2.68% last week, its fourth straight weekly decline, while BTC dropped from 80,504 to 74,807 over the same period. Last Friday, the 10-year Treasury yield was 4.86%, and the dollar index was 102.17.
Read the two sets of figures side by side: pricing power in energy and chips lies abroad, while pricing power in food and rent lies at home. We can’t control the half where prices are rising, and demand hasn’t yet arrived to support the half where prices are falling.
For crypto, only one part is a hard constraint. Mining rigs, storage, and electricity are all tied to upstream costs, which are rising. Risk appetite is tied to the stock market, and it’s shrinking. Today, Bitcoin chose the latter.
U.S. October CPI comes out tomorrow. The Fed’s rate decision is on December 9, and markets are pricing in a 77% chance of a rate hike.
#中本聪国际社区Baoluo币商资本 #宏观经济 #ChinaCPI
At 9:30 this morning, the National Bureau of Statistics released two sets of figures moving in opposite directions.
Industrial producer prices rose 5.7% year over year in October, up 0.7 percentage points from September’s 5.0% and the highest since July 2022. They accelerated for the third month in a row. Month over month, they rose 0.7%. All the price increases were upstream: coal mining rose 36.6%, oil and gas extraction 35.0%, and petroleum and coal processing 29.9%.
The consumer price index, released the same day, rose just 0.7% year over year, below the market forecast of 0.8% and last month’s 0.9%. Month over month, it was unchanged. Food prices fell 2.9%, fresh vegetables fell 16.9%, and pork fell 8.6%. Core CPI was 0.8%, a nine-month low.
Put the two together and the gap is 5.0 percentage points. It was 4.1 in September. The gap is still widening. Prices are rising upstream, but there’s no one to pass them on to downstream.
A closer look reveals two more telling figures. The biggest support for CPI came from gasoline, up 22.4% year over year and contributing 0.63 percentage points on its own. The portion of oil-price increases driven by the war has already made its way from wholesale to retail. On the other hand, data storage equipment rose 45.4%, tablets 29.3%, computers 23.0%, and mobile phones 16.7%. Together, these four categories added 0.26 percentage points to CPI. The memory chips snapped up by AI are already showing up on consumers’ shopping lists.
Gold jewelry is moving in the opposite direction. Its retail price fell 5.9% month over month in October, with the decline widening by a further 3.8 percentage points from September. Its year-over-year increase narrowed from 22.5% the previous month to 4.5%. International gold prices briefly fell below 4,000 during the month. Store prices followed. Today, COMEX is back at 4,129.9. The quoted gold price and business at the counter are no longer moving in lockstep.
Markets barely reacted. The Shanghai Composite rose 0.48% to 3,665.94. BTC is at 74,807, down 40.7% from 126,199 on October 6 last year; ETH is at 2,139, down 4.3%. The S&P 500 fell 2.68% last week, its fourth straight weekly decline, while BTC dropped from 80,504 to 74,807 over the same period. Last Friday, the 10-year Treasury yield was 4.86%, and the dollar index was 102.17.
Read the two sets of figures side by side: pricing power in energy and chips lies abroad, while pricing power in food and rent lies at home. We can’t control the half where prices are rising, and demand hasn’t yet arrived to support the half where prices are falling.
For crypto, only one part is a hard constraint. Mining rigs, storage, and electricity are all tied to upstream costs, which are rising. Risk appetite is tied to the stock market, and it’s shrinking. Today, Bitcoin chose the latter.
U.S. October CPI comes out tomorrow. The Fed’s rate decision is on December 9, and markets are pricing in a 77% chance of a rate hike.
#中本聪国际社区Baoluo币商资本 #宏观经济 #ChinaCPI
