Highlights of the first quarterly report of China economy： there is a foundation for the stable operation of prices

There is a foundation for the stable operation of prices.

CPI rose by 1.1% year-on-year, and core CPI rose by 1.2% year-on-year, which became the key word of the overall price performance in China in the first quarter.

Since the beginning of this year, all localities and departments have coordinated epidemic prevention and control and economic and social development, and taken many measures to ensure the supply and price stability of important livelihood commodities and bulk commodities. In the first quarter, CPI rose moderately, while PPI rose at a high level year-on-year. Experts said that China has the conditions and ability to continue to maintain the stable operation of prices and achieve the expected goals for the whole year.

CPI is in a moderate rising range.

In the first quarter, CPI rose by 1.1% year-on-year, which was generally in a moderate rising range. The core CPI rose by 1.2% year-on-year, and the growth rate was the same for three consecutive quarters.

Food prices have played an important role in price stability. In the first quarter, food prices fell by 3.1% year-on-year, which affected CPI by about 0.59 percentage points, mainly driven by the decline in pork prices. With the continuous recovery of pig production capacity, the price of pork decreased by 41.8% on average in the first quarter. Affected by rising international energy prices, domestic energy prices rose by 12.2% in the first quarter.

Guo Liyan, director of the General Situation Office of China Macroeconomic Research Institute, said that both grain and energy are important primary products, and their supply is easily affected by epidemic situation and extreme weather. In the past three years, the epidemic has led to the disorder of the global supply chain, and the abundant liquidity has led to a sharp rise in international food and energy prices, and some commodity prices were once divorced from the fundamentals of supply and demand. China has taken many measures to ensure stable and guaranteed production, ensuring a bumper harvest of major grain crops year after year. Under the background of global energy supply shortage, China has tightened the responsibility of various departments, localities and enterprises to ensure supply and price stability, highlighting the institutional advantages and the advantages of a complete and independent industrial system.

"Food prices are the basis of a hundred prices, and stable food prices are stable." Guo Liyan said that China’s prices continue to operate in a reasonable range, which is a low inflation level.

"Globally, China’s CPI increased by 1.1% year-on-year in the first quarter. Compared with developed economies and some emerging economies, China’s overall price performance is moderate." Zhou Maohua, a macro researcher at the financial market department of China Everbright Bank, said. Wen Bin, chief researcher of China Minsheng Bank, also believes that it is very rare for China’s prices to remain at a moderate level in the context of global inflation. On the one hand, it has a certain relationship with China’s current weak demand, on the other hand, it benefits from China’s comprehensive policy to ensure stable supply and prices, and maintains the stability of the overall price level.

PPI showed a downward trend month by month.

In the first quarter, PPI rose by 8.7% year-on-year, which was 3.5 percentage points lower than that in the fourth quarter of last year.

The increase in the prices of means of production declined, and the prices of means of subsistence were generally stable. Among them, the price of means of production in the first quarter rose by 11.3% year-on-year, which was 4.8 percentage points lower than that in the fourth quarter of last year, which affected the increase of PPI by about 8.49 percentage points, accounting for 98% of the total increase of PPI. The price of living materials rose by 0.9% year-on-year, which was the same as that in the fourth quarter of last year, affecting the PPI increase by about 0.21 percentage points.

Wang Youfen, director of the Urban Social and Economic Investigation Department of the National Bureau of Statistics, said that the effect of the policy of ensuring supply and stabilizing prices continued to appear, and the price increase of coal, steel and other industries dropped significantly compared with the previous period. Geopolitics and other factors lead to sharp fluctuations in international energy and non-ferrous metal prices, which have a great impact on domestic related industries.

"Recently, international commodity prices have reached a new high. According to World Bank data, in March, the international energy price index rose by 24.1% month-on-month, and the non-energy price index rose by 8.1% month-on-month. The total index reached a new high in recent years." Fu Linghui, spokesman of the National Bureau of Statistics, said that under the background of tight supply and demand and increasing uncertainty in the international commodity market, it is more likely that prices will fluctuate at a high level.

Meng Wei, spokesperson of the National Development and Reform Commission, said that the PPI rose by 8.3% year-on-year in March, which was 0.5 percentage points lower than that of the previous month, and fell for five consecutive months, in stark contrast to the continuous rise of PPI in major developed economies. Although international input factors have increased the uncertainty of commodity price trends, it is expected that the overall downward trend of PPI will not change during the year as the effect of the policy of ensuring supply and stabilizing prices continues to appear and the cardinal utility is superimposed.

Meng Wei said that China will make comprehensive policies and precise regulation, respond to the uncertainty of the external environment with the certainty of domestic supply and price stability, and do its best to ensure the supply and price stability of bulk commodities. In the next step, we will closely follow the commodity market and price trends, find problems in time, judge the situation in time, and respond to the disposal as soon as possible.

Guard against imported inflation

At present, global inflationary pressure continues to climb. China’s economy has been deeply integrated into the world economy, and the proportion of some bulk commodities is relatively high. Rising international prices will objectively increase the risk of imported inflation. Recently, several important conferences in the State Council made arrangements for stabilizing prices, pointing out that to "stabilize employment and stabilize prices to support economic operation in a reasonable range" and "stabilize prices must grasp the key points such as grain production, energy supply and smooth logistics".

Guo Liyan said that due to the impact of the epidemic, the supply chain of the world’s major primary products related industrial chains is in the process of reshaping, and international liquidity is still in a relatively affluent stage, which is more prone to the obvious increase in the volatility of international food and energy prices. Some industry enterprises are vulnerable to external shocks such as insufficient supply and abnormal price fluctuations. To calmly cope with the changes in the past century and the epidemic in the century and promote the stable and healthy development of the economy and society, we must focus on the major strategic needs of the country and stabilize the basic disk of agriculture and energy.

Zhou Maohua predicts that prices will rise moderately during the year, and the target of around 3% for the whole year can be achieved. He suggested that it is necessary to guard against the potential imported inflation caused by the high price of energy commodities, the impact of the epidemic on freight logistics, and the phased impact of local extreme weather on agricultural products.

"From the trend, despite the international import factors and the short-term supply pressure of some fresh foods, overall, there are many favorable conditions for CPI to maintain a moderate increase." Fu Linghui said that from the perspective of demand, consumption and investment demand are still recovering, which has limited effect on price pulling. From the perspective of supply, grain production has been bumper and stocks are abundant; The production capacity of live pigs has generally recovered, and the supply of pork is generally sufficient. The supply capacity of China’s goods and services market is relatively sufficient. In March, the price increase of industrial consumer goods excluding energy was at a low level; Service prices rose by 1.1% year-on-year, with the growth rate dropping by 0.1 percentage point from last month. At the same time, the measures to ensure supply and stabilize prices in the market will continue to be effective, which is also conducive to price stability. Therefore, there are foundations and conditions for maintaining overall price stability.

Wen Bin believes that although there is upward pressure on prices in the next stage, it does not rule out that the CPI increase in individual months may exceed 3%, but China has the ability and confidence to keep prices stable at a reasonable level. We should continue to do a good job in ensuring the supply and price stability of energy and grain to ensure the stability of the overall price level. Price stability is also conducive to China’s macro policies, especially monetary policies, to remain forward-looking and flexible, so as to better play the supporting role of finance in the real economy. (Reporter Xiong Li)