CPI stabilized in the "2 era" in July, hard-won resistance to double shocks

　　People's Financial Review: CPI stabilized at "2 Times" in July, hard-won resistance to double shocks 

　　Zhu Yifan

　　The National Bureau of Statistics released the National Consumer Price Index (CPI) for July 2020. In July, the CPI rose 2.7% year-on-year and 0.6% month-on-month. The CPI in July continued the trend of June and remained stable at the "2 era", and the increase was within a reasonable range of moderate rise.

　　If the CPI is too low, it will be considered a risk of deflation. On the contrary, if the CPI value is too high, it generally means that there is a risk of inflation. The reason why "2 Times" is valued is that the CPI increase of about 2% to 3% is usually considered to be a moderate and reasonable range, which is a manifestation of orderly market operation and stable economic prosperity.

　　At present, the impact of the epidemic on the world economy continues to ferment, and the domestic economy is also suffering from the impact of the new crown epidemic superimposed by floods in various places. At this time, the July CPI indicator can withstand the double shocks at home and abroad, and continue to stabilize in the "2 era" in June, which is hard-won. The “stability” of the CPI in July stems from the continuous release of relevant policies such as price stabilization, supply protection, and basic livelihood protection.

　　In July, the supply and demand of industrial and consumer goods were relatively stable. The main reason for the increase in CPI was the increase in food prices caused by the tight relationship between food supply and demand. From a month-on-month perspective, the CPI went from a decline of 0.1% last month to an increase of 0.6%. Among them, food prices rose by 2.8%, an increase of 2.6 percentage points from the previous month, affecting the CPI increase by about 0.62 percentage points. From a year-on-year perspective, CPI rose by 2.7%, an increase of 0.2 percentage points from the previous month. Among them, food prices rose by 13.2%, an increase of 2.1 percentage points, affecting the increase in CPI by about 2.68 percentage points. In addition, looking at the core CPI indicator excluding food and energy prices, the increase was only 0.5% year-on-year, and the increase was 0.4 percentage points lower than the previous month.

　　The increase in food prices is mainly due to the increase in demand caused by the steady recovery of catering and other industries under the promotion of policies related to the resumption of production and work. Seasonal factors have led to a decline in the output of some food products, and floods have caused transportation difficulties and tight supply.

　　The biggest "culprit" of rising food prices is pork. my country has been the world's largest pork consumer for 10 consecutive years, with consumption accounting for nearly half of the global share. In July, with the gradual recovery of catering services, pork consumption demand continued to increase, but floods in many places had a certain impact on the transportation of live pigs, resulting in tight supply. In July, from a month-on-month perspective, pork prices rose by 10.3%, an increase of 6.7 percentage points from the previous month; from a year-on-year perspective, pork prices rose by 85.7%, an increase of 4.1 percentage points from the previous month. Second, the major impact on food prices is the significant increase in vegetable prices under the influence of adverse weather. In July, from a month-on-month perspective, the price of fresh vegetables increased by 6.3%, an increase of 3.5 percentage points; from a year-on-year perspective, the price of fresh vegetables increased by 7.9%, an increase of 3.7 percentage points.

　　Although food prices have risen to a certain extent, it must be noted that the current food prices do not have the basis for a substantial increase. This year's summer grain output reached 285.6 billion jin, an increase of 2.42 billion jin, a year-on-year increase of 0.9% compared to last year, a record high. The summer grain harvest has laid a very good foundation for stable grain prices and even overall food prices. At present, my country's industrial and agricultural production supplies are abundant, the market is full of vitality and resilience, and prices have a solid foundation for stable operation.