Galaxy Securities: PPI annual high point may be nearing, price transmission still needs to be repaired.

Guosen Securities believes that the annual high point of the PPI may be approaching, and price transmission still needs to be repaired: it is expected that the PPI in July is very likely to be a temporary high point for the year-on-year reading of the PPI. On the one hand, the current crude oil prices are close to pre-conflict levels, although they are still disrupted by the US-Iran situation, but if there is no substantial interruption in crude oil supply and transportation channels, the geopolitical risk premium supporting oil prices may show more as short-term pulses, and the pull of the petrochemical industry chain on the PPI will marginally weaken, and even turn into a drag. On the other hand, the scissor difference between PPI and CPI is still widening, reflecting the poor transmission of upstream price increases to downstream end-users. This round of price increases is more concentrated in the cost side and some prosperous industries, the capacity of end-demand absorption is still insufficient, the ability of enterprises to transfer costs to household consumption is limited, restraining the upward momentum of industrial product prices.