After the release of the CPI data in August, the attention of public opinion was obviously not as great as in the past two months.
I still remember last month when the July CPI data was released at minus 0.3% year-on-year, public opinion was overwhelming and advocating deflation.
There is obviously no such heat now, and the reason is simple, because the August CPI data turned from negative to positive.
The August CPI increased by 0.1% year-on-year, which is still at a relatively low inflation level, but at least better than the negative 0.3% inflation rate last month.
The most important thing is that the CPI in August increased for two consecutive months month-on-month.
There is no clear standard for defining deflation.
The more mainstream definition is that CPI has been negative for 6 consecutive months month-on-month.
It is also believed that the CPI must have negative growth for 6 consecutive months year-on-year in order to be considered deflationary.
But by any standard, we can hardly call it deflation right now.
After all, the CPI has been growing month-on-month for two consecutive months.
When I refuted the deflationary theory last month, I also predicted that our inflation should also rebound in the next few months.
The main factor behind the sharp decline in inflation was oil prices.
In June last year, our domestic oil price peaked, and the price of 92 gasoline in most parts of the country was 9.3 yuan / liter.
At the end of June this year, the oil price of No. 92 gasoline generally dropped to about 7.5, a year-on-year decrease of about 19%.
But over time, the year-on-year decline in oil prices has narrowed rapidly, which is the main basis for my previous judgment that inflation will rebound.
Among the CPI data breakdown options released by the Statistics Bureau:
In June, the price of fuel for transportation fell by 17.6% year-on-year.
In July, it was down 13.2% year-on-year.
In August, it fell 4.5% year-on-year.
It can be seen that this year-on-year decline is a significant narrowing.
On the one hand, oil prices began to fall sharply in August last year, from a peak of 9.3 yuan / liter in June last year to 8.35 yuan / liter.
On the other hand, due to the rise in international oil prices, domestic oil prices have also continued to rise in the past two months.
The No. 92 gasoline at the end of August was almost raised to 8.1 yuan / liter, compared with the price of 7.5 yuan / liter at the end of June, which is still a lot higher.
On the one hand, oil prices continued to fall in the second half of last year, and on the other hand, oil prices continued to rise.
This naturally makes the current year-on-year decline in oil prices rapidly narrow, so the effect of oil prices on CPI will be reduced.
At the same time, my article last month also reminded that pork prices may relay oil prices in the second half of the year and become the main weight to pull down CPI.
This is because, in the second half of last year, the price of pigs out of the slaughter rose sharply, from 12.29 yuan in March to 27 yuan in October last year.
This year's pig slaughter price, although there was also a wave of rise in July, but it only rose from the price of 14.5 yuan to about 17 yuan now, compared with the price of 24 yuan in the same period last year, obviously there is a large year-on-year decline.
According to data released by the Bureau of Statistics, livestock and meat prices fell by 10.5% in August, affecting the CPI by about 0.36 percentage points, of which pork prices fell by 17.9%, affecting the CPI by about 0.28 percentage points;
Pork prices have always been the main weight of our CPI, so much so that the CPI index was called the pig index in the past, although the weight of pork has dropped a lot in recent years, but the impact of pork prices on CPI is still relatively large.
Therefore, the August CPI data, although the year-on-year decline in oil prices narrowed sharply, but the decline in pork prices is still relatively large, which is also the reason why the CPI in August turned from negative to positive, but still relatively low.
Over the past few months, some in the public opinion have purposefully advocated deflation to sing the downturn of our economy.
But I personally believe that instead of worrying about deflation, we need to watch out for inflation now.
There are several grounds for this.
One is that pork prices basically fell back below 20 yuan in December last year, which means that at the end of December this year, the effect of pork prices on CPI will disappear.
In addition, in December last year, domestic oil prices basically fell to around 7.6 yuan, according to the current oil prices, the impact of oil prices on CPI will turn from negative to positive at the end of this year.
In addition to these two CPI impact weights, let's look at inflationary pressures in the services sector.
Both have cyclical properties due to energy and food prices.
Therefore, in addition to looking at the inflation rate, the international community will also look at the core inflation rate of energy and food prices.
Our core inflation rate in August was 0.8%, which is still not too low.
In particular, the month-on-month increase in core inflation was 0.5%, the largest increase in the past year.
We can also look at the eight categories of subdivision options announced by the Bureau of Statistics.
It can be seen that in addition to "food, tobacco and alcohol", "daily necessities and services", and "transportation and communications", other major items have basically increased year-on-year to varying degrees, especially "education and culture" and "other supplies and services" have increased by more than 2% year-on-year.
This shows that in the services sector, we are not experiencing deflation, and there are some inflationary pressures slightly.
The fundamental reason behind this is that the central bank is releasing water to stimulate the economy.
Since last year, the central bank has lowered the RRR a total of three times.
The 1-year LPR rate has also been reduced from 3.85% in November 2021 to the current 3.45%, with five cuts for a cumulative reduction of 40 basis points.
Although this can only be regarded as a toothpaste rate cut, not a flood irrigation, it is also a release of water to stimulate the economy.
On the money supply side, M2 was growing at a year-on-year rate of 12% in the first few months.
Although the demand side was still relatively weak in the first half of the year, especially in July, there was an extremely low social financing value of 528.2 billion yuan.
However, the social finance data in August also quickly recovered to 3.12 trillion yuan.
I have analyzed this before, the transmission of money needs a time process, although we have the problem of some funds idling in the banking system after releasing water, but over time, as long as it continues to squeeze, then the funds idling in the banking system will eventually slowly flow to the society.
This can also be seen from the fact that in recent months, the year-on-year growth rate of M2 has declined, and some clues can be seen.
In the era of credit money, even deflation is temporary, and inflation is the main theme in the long run.
Some people may say that Japan's 30-year deflationary cycle lasts.
Japan's situation is a special case, it cannot be regarded as a general situation, and Japan's situation is completely different from ours.
What's more, Japan is currently facing inflationary pressures.
Japan has been experiencing inflation of more than 3% for more than a year.
Therefore, people who now sing the praises of our economy by advocating deflation are typical of looking in the wrong direction.
Of course, I don't think we will be in the current global economic downturn, we will suddenly have a big inflation again, at least not at this stage.
I dare say that if our inflation rate returns to the normal level of 2% early next year, it is estimated that those who advocate great deflation now will turn around and advocate big inflation.
For them, the CPI falls, it is also to end, and the CPI rises, it is also to finish.
In their thinking, there is no intermediate state, either great inflation or great deflation, so that our inflation cannot be maintained at normal levels.
They don't really care whether our CPI goes up or down, they just want to export the emotional atmosphere that the economy is about to end.
We need to distinguish clearly, this kind of deliberate rhythmic behavior that must be completed left and right is clearly different from the normal worries of us ordinary people.
The core difference is that we ordinary people see bad economic data, at most we are worried, but we always want our economy to become better.
And the people who are going to finish left and right, they are desperate to make our economy worse, so when they see that our economic data is not good, they are elated.
Therefore, it is still relatively easy to distinguish between the two.
The source of this article is the "Great Vernacular Current Affairs" public account.
Author: Star Talk Dabai.