Zuo Xiaolei believes that considering the rapid increase in the current trade surplus, the issuance of currency for RMB hedging foreign exchange will also increase, but the most important problem now is that funds will enter the real economy. "Why is investment still falling? Where has the money gone, I think the State Council inspection team should supervise this issue when it goes to the locality. Zuo Xiaolei said.
Reporter Ding Jun
Intern reporter Chen Haiyin
Special correspondent Jiang Wenjing reported from Song Xingguo in Beijing and Guangzhou
On June 9, data released by the National Bureau of Statistics showed that the consumer price index (CPI) rose 1.2% year-on-year in May; the industrial producer price index (PPI) fell 4.6% year-on-year.
Both figures are below market expectations, with the May CPI falling 0.2% month-on-month, already the third consecutive month of decline. On average, the CPI rose 1.3% from the same period last year, significantly lower than the 3% regulatory target set at the beginning of the year.
Due to seasonal factors, the decline in fresh vegetable, fresh fruit and egg prices in May combined affected the overall consumer price (CPI) decline of 0.39 percentage points, becoming the main factor in May's CPI growth rate down 0.3 percentage points from the previous month. This is also the first time in the year that CPI gains have fallen.
Some institutions and experts believe that considering pork prices and some non-food prices resuming, the price level is expected to recover slightly in the third quarter, but the full year may still be lower than last year's level of about 2%.
Zuo Xiaolei, president adviser of Galaxy Securities, believes that the current price level is generally stable, and the growth rate of currency investment is about 12%, but it should be noted that a lot of funds have entered the stock market, but not into the real economy.
"This is the biggest risk to steady growth. This risk is to be suggested, not simply to conclude that the downward pressure on the economy will increase and further issue currency. Zuo Xiaolei said.
Is the lower CPI than expected seasonal?
Yu Qiumei, senior statistician of the Urban Department of the National Bureau of Statistics, believes that the increase in CPI in May is lower than expected, which is related to the decline in the price of some fresh foods.
Compared with the same period last year, the price increase of pork, fresh vegetables and household services in CPI in May fell by 3.0, 0.7 and 0.2 percentage points respectively; the price of plane tickets and fresh fruits changed from rising to falling; and the decline in egg prices expanded by 9.5 percentage points.
Compared with April, seasonal factors have led to a more pronounced decline in some food prices. Food prices fell by 0.9% month-on-month in May, affecting the overall level of CPI by about 0.31 percentage points. Among them, the prices of fresh vegetables, fresh fruits and eggs fell by 9.2%, 2.7% and 1.2% respectively.
However, there are still some rising factors in prices. Pork, tobacco, gasoline and diesel prices all recovered in May. Among them, pork prices rose by 2.7% month-on-month, affecting the CPI by 0.08 percentage points; from a year-on-year point of view, pork prices rose by 5.3% in May, affecting the overall level of CPI by about 0.15 percentage points. The reason is that the price of pork in the early stage is low, feed and labor costs are rising, and some farmers reduce the pig inventory, resulting in a tight supply of pork.
In addition, since May 10, the state has raised the cigarette consumption tax, which has affected tobacco prices by 3.6%, affecting the CPI by 0.06 percentage points. At the same time, affected by the recovery of international crude oil prices, gasoline and diesel prices rose by 5.7% and 6.5% respectively, affecting the CPI by 0.05 percentage points.
Compared with the same period last year, the price of some goods and services in May was still higher than that of 9.8%, 8.6%, 6.5% and 5.6% respectively in registered medical fees, family services, fresh vegetables and preschool education.
Liu Xuezhi, an analyst at the Bank of Communications (601328, shares), believes that non-food prices rose 0.2% month-on-month in May and rebounded to 1% year-on-year, an increase of a new high in the year. The recovery in international crude oil prices led to a rebound in vehicle fuel prices by 4.7% month-on-month, and the year-on-year decline narrowed by 3.1 percentage points to -13.2%. Given that the current economic operation has not yet picked up significantly, the macro environment has limited the strength of the price level to rise during the year. Liu Xuezhi believes that there is no obvious risk of deflation at present, and prices are operating at a low inflation level.
Jing Jizhong, former deputy secretary-general of the Pig Industry Branch of the China Animal Husbandry Association, told reporters that the rise in pork prices at this stage is a adjustment to the sharp decline in pork prices last year, and will continue to rise in the future, but the range is limited. "On the one hand, the overall demand for consumption is weak, and on the other hand, although the stock is reduced, the supply of pork is still sufficient."
According to the 21st Century Business Herald reporter, the current pork price accounts for about 5% of the entire CPI weight.
Continued easing in the second half of the year can be expected
Looking forward to the second half of the year, prices may rise, but the magnitude will not be too large.
Liu Xuezhi believes that in the past six months, there have been three interest rate cuts and two RRR cuts, monetary policy continues to be loose on a prudent basis, and the upward effect of liquidity on prices will appear, but it will not significantly push up the price level. As a result, the CPI is expected to pick up slightly in the third quarter, possibly above 2% in some months, but the average price level for the whole year will be lower than last year. In this light, the price increase for the whole year will still be below the annual target of 3%.
According to figures released by the National Bureau of Statistics, prices in the industrial sector are still low.
In May, the PPI fell 4.6% year-on-year, the same year-on-year decline as the previous month. By industry, oil and gas extraction, petroleum processing, ferrous metal smelting and calendering, coal mining and washing and dressing factory prices fell by 36.1%, 18.6%, 15.7% and 14.0% respectively year-on-year, which affected the total level of industrial producer prices this month by about 2.9 percentage points year-on-year. This reflects that the current demand in the upstream sector of industry is still weak.
Liu Yuanchun, deputy dean of the School of Economics at Chinese University, believes that it is difficult for the CPI to exceed the expected target of 3% from the perspective of the whole year, and it is difficult for domestic prices to rise because international food prices and other commodity prices are lower than domestic prices.
This continued downturn will continue into the second half of the year, and even if it picks up, the magnitude will not be too obvious.
Liu Yuanchun believes that increasing the money supply cannot solve the problem of stable growth, and needs to be combined with fiscal policy, "many of the issued currencies are swirling in the virtual economy and have not returned to the real economy."
Since June last year, the Shanghai Composite Index has risen by more than 100%, although the improvement of the securities market is conducive to corporate financing, but in a short period of time, a large amount of funds have pulled up the stock market, in the absence of corporate performance support, it is worrying.
As of now, the 1-year deposit benchmark interest rate is 2.5%, the loan interest rate 1-year benchmark interest rate is 5.35%, from the May CPI increase of only 1.2%, considering that the current upper limit of the floating range of the deposit interest rate of financial institutions is adjusted from 1.2 times of the deposit benchmark interest rate to 1.3 times, there is still a possibility of further reduction of the deposit and loan interest rate and the reserve requirement ratio in the future.
Zuo Xiaolei believes that considering the rapid increase in the current trade surplus, the issuance of currency for RMB hedging foreign exchange will also increase, but the most important problem now is that funds will enter the real economy. "Why is investment still falling? Where has the money gone, I think the State Council inspection team should supervise this issue when it goes to the locality. Zuo Xiaolei said.
Data released by the General Administration of Customs the previous day showed that China's imports in the first five months were 4.07 trillion yuan, down 17.2%, and the trade surplus was 1.33 trillion yuan, tripling year-on-year.