Why did the November CPI hit an 11-year low?

　　News 1+1丨November CPI, why did it hit an 11-year low?

　　According to data released by the National Bureau of Statistics on December 9th, in November this year, the national consumer prices fell by 0.5% year-on-year.

This is the first time that 11 years later, CPI has returned to negative growth.

What are the main factors leading to negative growth?

Will negative growth become a trend in the future?

"News 1+1" linked with Zhang Liqun, a researcher at the Macroeconomic Research Department of the Development Research Center of the State Council, and shared concerns: Why did the CPI in November hit an 11-year low?

1 What do you think of the November CPI decline both year-on-year and month-on-month?

　　Zhang Liqun: Price changes are the performance of market supply and demand.

Economic growth has a cyclical feature.

In the economic upswing cycle, demand generally guides supply. At this time, supply is generally in short supply, and price increases increase.

During the economic downturn, supply exceeds demand. At this time, the price increase generally remains at a relatively low level.

In fact, my country's economic growth rate has declined since 2010, and the GDP growth rate has dropped from 10.3% to 6.1% last year, and this year may be even lower.

In this process, from the perspective of the macroeconomic aggregate relationship, the overall situation is characterized by oversupply. In this context, lower price increases are a basic feature.

Of course, the price increase this year is relatively low, but also contains some special factors.

For example, the impact of the epidemic shock, especially the "pig cycle" in 2019, has a significant impact on food prices.

Therefore, in 2019, despite the economic downturn, the CPI increased by more than 4% year-on-year last year.

Through various aspects of work, its effect has shown that the supply of pork has increased significantly this year, so the increase in pork prices has dropped significantly, and the impact of the "pig cycle" will soon disappear in the second half of this year.

The combination of these factors forms the basic feature of this year's CPI returning to the downward cycle of economic growth.

2 Will CPI continue to decline?

　　Zhang Liqun: China's economy should be a turning point from a downward trend to a rebound this year.

The main basis for judgment is that in the past few years, we have begun to overcome the downward pressure on the economy and focus on expanding demand.

The impact of the epidemic this year has aggravated the contradiction of insufficient demand, so this year it is more clearly stated that we must firmly grasp the strategic basis for expanding domestic demand, especially to build a new development pattern, smooth the domestic cycle, and promote the domestic and international economic double cycle. It includes the cycle when China's economy starts to rebound.

In this context, the effect of expanding domestic demand will be further manifested.

The orders of enterprises will increase, and the production situation of enterprises will be more active.

At this time, the market supply and demand relationship has gradually developed from oversupply to a general balance between supply and demand, which will have an upward pulling effect on future price trends.

3 In November, PPI fell by 1.5% year-on-year, and the rate of decline narrowed. The operating rate and profitability of the industrial sector gradually improved

　　Zhang Liqun: Judging from the trend of PPI, its decline is narrowing, which just shows that the contradiction of insufficient demand is alleviating in the production material market and the industrial product market.

This mitigation is manifested in a narrowing trend in the decline of PPI, which also shows that under the severe impact of the epidemic this year, we have made various efforts in expanding domestic demand and focusing on the "six stability" and "six guarantees". , Its effect is showing more and more.

Therefore, the problem of insufficient demand is constantly being overcome and resolved.

Therefore, the effect of the entire policy of expanding domestic demand is to support the entire market's supply-demand relationship and shift towards a balance of supply and demand.

4 From the perspective of ordinary people, is it a good thing that CPI increases and prices decrease?

　　Zhang Liqun: The decline in CPI growth actually shows that from the perspective of people's livelihood, it first shows that the level of security of supply is relatively high, especially for some basic daily necessities. This is a very good aspect.

But on the other hand, from the perspective of the company, the decline in price level will increase its production difficulties, insufficient market demand, and poor product sales. At this time, the company's operating income growth may be affected, and its development will not be good. It will have another impact on employment and the income of residents.

Therefore, to improve people's livelihood through economic development, one is to ensure the sustained and rapid growth of employment and residents' income, and the other is to keep prices generally stable.

At this time, we must adopt macro-control to make the entire economy achieve a balanced growth of full employment. It is very important to achieve this goal.

5 The price of pork has a great impact on CPI. When will the price of pork stabilize?

　　Zhang Liqun: Judging from this year, the increase in pork prices has declined rapidly, which shows that the effects of our policies to increase the supply of live pigs are appearing quickly.

However, on this basis, it should also be noted that pork prices continue to fall, which has a negative impact on pork production.

How to keep the production and supply of live pigs generally stable, try to dilute its cyclical fluctuation characteristics, so that the entire pork price has a long-term stable basis, this is very important, so the adjustment of market prices must be coordinated with the development of the entire live pig production Well, there is a lot of work here that needs further attention.

6 How to boost consumption so that people dare to spend money?

　　Zhang Liqun: This year's consumption has been greatly affected by the epidemic. In the first quarter, consumption grew by 19% year-on-year.

Although the effectiveness of prevention and control of the epidemic has become more and more obvious, people's freedom of movement has continued to increase, and the consumer market is recovering, but so far consumption is still experiencing negative growth.

Therefore, the next step is to make further positive progress in the improvement of epidemic prevention and control and precision prevention and control capabilities, so that people's freedom of movement will be further strengthened.

On this basis, by ensuring employment and increasing residents’ income, residents’ purchasing power will be further improved, and the demand in the entire consumer market will be further picked up and further activated.

On this basis, the characteristics of smooth changes in the entire CPI may become more and more clear.