Citic Securities: PPI turns positive as scheduled, the divergence between PPI and CPI becomes the focus of observation for the next step.

According to the research report of CITIC Securities, in March, China's PPI year-on-year reading turned positive for the first time after 41 consecutive months of decline, in line with market expectations. The rise in crude oil prices under the US-Iran conflict was the core driving force for PPI, with the three major oil-related industries cumulatively affecting a month-on-month increase of about 0.6 percentage points in PPI. In addition, the non-ferrous metals and electronics industries also contributed strong price increase momentum. The year-on-year growth rate of CPI in March was significantly lower than market expectations, and the significant increase in energy sub-index prices was not able to offset the price drag brought by the decline in food, tourism, and jewelry prices on a month-on-month basis. If international oil prices remain high, the growth rate of profits of large-scale industrial enterprises in China may show a trend of "first rise, then fall", and subsequent attention should be paid to the trends of the scissor difference between PPI and CPI and price transmission.