Author: Liu Xinyong
Drinking yogurt without licking the lid, together with the mobile phone without film, eating instant noodles without drinking soup, is jokingly called an important skill that highlights the temperament of local tycoons by netizens. Today's statistics bureau data shows that the CPI rose 1.4% year-on-year in November, a five-year low. So the question is: the price is so low, will there be no need to lick the bottle cap in the future? Please read on!
What's in CPI's basket?
CPI is an abbreviation of the Consumer Price Index, which reflects the changes in the prices of consumer goods and services purchased by residents, covering the prices of goods and services in eight categories and 262 basic categories, such as food, tobacco and alcohol, clothing, household equipment and maintenance services, health care and personal goods, transportation and communications, entertainment and education and cultural goods and services, and housing.
The CPI rose 1.4% year-on-year in November, which means that the combined price in November last year was 100 yuan, and rose to 101.4 yuan last month. That's the lowest gain since November 2009. So, is your wallet feeling this change? What prices are falling and what is rising? What is the price of yogurt?
The top decline (%):
Top increases (%):
There are some hints to be seen from this leaderboard. Affected by the continuous decline in international crude oil prices and the country's anti-monopoly investigation of the automotive industry, the price of "vehicle fuel and spare parts" fell the most year-on-year. The prices of fresh vegetables, cooking oil, pork, etc. have also decreased due to the relatively abundant supply. Conversely, egg and fresh fruit prices both rose by more than 10% year-on-year, while dairy prices also ranked first. It seems that licking or not licking is still a problem.
Prices are new and low, what do I have to do with it?
CPI is related to everyone, its level determines how much consumers spend to buy goods and services, how much investment income so that funds do not depreciate, thus affecting everyone's quality of life.
In the first 11 months of this year, prices rose only 2% year-on-year, in a lower range. This is undoubtedly good news for ordinary people, because it means that the purchasing power of the money in their hands is relatively increased, and more products and services can be bought for the same money. Currently, the benchmark one-year deposit rate is 2.75%, which means that "outperforming the CPI" is no longer a difficult task, even if the money is deposited in the bank, it will not depreciate.
According to the survey, the per capita disposable income of residents in the first three quarters of the country was 14986 yuan, an increase of 10.5% in nominal terms year-on-year, and the actual growth rate after deducting price factors was 8.2%. In this way, although the economic growth rate is much lower than before, the lower price level has benefited people from it, and the real growth rate of income has exceeded the economic growth rate of 7.4% in the same period.
With a low CPI, is the economy healthy?
A moderate price level can stimulate consumption, expand domestic demand, and promote economic development. If prices are too low, or even deflation, to a certain extent, it will be beneficial to the lives of residents, but in the long run, it will seriously affect the confidence of investors and the consumption psychology of residents, resulting in vicious price competition, which is not conducive to the long-term development of the economy and the long-term interests of the people.
The Chinese government wants to keep its CPI up around 3.5 percent this year. The CPI rose only 1.4% in November and 2% in the previous 11 months, and there is no suspense in achieving the annual regulatory target. So how will the current price level affect the health of the economy and policy trends? Let's look at the wonderful statements of institutional and economic experts:
Guan Qingyou, executive director of minsheng securities research institute: CPI data shows that total demand is weak, oil prices are down, food and non-food are negative growth month-on-month, and monetary policy has room for easing. Industrial producer prices (PPI) fell by 2.7% year-on-year, real estate declined, and overcapacity remained severe.
Zuo Xiaolei, chief economist of Galaxy Securities: CPI growth of 1.4% is normal, because the problem of overcapacity has not been solved, there is no pressure on PPI transmission, coupled with the recent sharp price reduction of commodities such as oil, production costs have declined, and final consumer prices have no reason to go higher. However, not the low increase in CPI should be loose money, monetary policy is a crisis policy, to solve the problem to be precise policy, for the problem to prescribe the right medicine.
LIU Bo, analyst at CICC: Weak aggregate demand drags down inflation. From a chain-on-month perspective, the CPI is just one step away from entering deflationary range. Looking ahead, the year-on-year growth rate of CPI and PPI in December may continue to decline, and the risk of deflation will increase significantly. Therefore, counter-cyclical monetary policy easing is very necessary, and the pressure to cut the RRR and cut interest rates again is still large.
Wang Tao, Chief Economist of UBS China: The risk of deflation in China has intensified, which will push up the level of real interest rates. We believe the central bank is likely to cut the bank benchmark interest rate by the end of 2015. Central banks will also continue to maintain sufficient liquidity in the market to maintain lower interest rate levels.