PPI may continue the downward trend of inflation, and proactive fiscal policy and prudent monetary policy will come first

2022-05-14 0 By

Han Zuyi, reporter of Economic Herald On February 16, the CPI and PPI data for January 2022 were released.PPI continued to decline on a monthly basis, with the year-on-year growth rate falling.And because the PPI rise fell more than CPI, the “scissors gap” between the two further narrowed.”The ‘knife gap’ between PPI and CPI has narrowed for three consecutive months, indicating that the overall price level is falling and the cost pressure on enterprises continues to ease. In particular, growth drivers in the middle and downstream sectors are expected to strengthen.”Wang An, deputy director of the Regional Economic Institute of Shandong Provincial Macroeconomic Research Institute, told the Economic Herald that this is mainly due to the promotion of domestic supply and price stability policy, domestic pricing commodities such as coal, steel and other industries prices significantly lower.”Although international oil prices have risen recently, they are mainly affected by extreme weather and geopolitical conflicts.PPI is expected to continue its downward trend as China steps up efforts to stabilize supply and energy and raw material supplies become more stable.”Wang said.To be specific, before the Spring Festival, the supply of important goods for people’s livelihood was guaranteed, and consumer prices remained stable on the whole.The CPI rose 0.4 percent from a 0.3 percent decline last month.The increase was 0.5 percent in urban areas and 0.3 percent in rural areas.Food prices rose 1.4%, while non-food prices rose 0.2%.Consumer prices rose 0.5 percent and services prices rose 0.3 percent.The CPI rose 0.9 per cent year on year.The increase was 1.1 percent in cities and 0.4 percent in rural areas.Food prices fell 3.8 percent, while non-food prices rose 2.0 percent.Consumer prices rose 0.4 percent and services prices rose 1.7 percent.Thanks to the policy of ensuring supply and stabilizing prices, prices of coal, steel and other industries fell in January, driving down the overall price of industrial products.On a month-on-month basis, the PRODUCER price index fell 0.2 per cent, narrowing by 1.0 percentage points from the previous month.Among them, the price of means of production fell 0.2 percent, 1.4 percentage points narrower than last month;The price of means of living was flat.On a year-on-year basis, the producer price index rose 9.1 per cent, down 1.2 percentage points from the previous month.The prices of means of production rose by 11.8%, down 1.6 percentage points.The price of means of living rose 0.8 percent, down 0.2 percentage points.Prices rose in 36 out of 40 industrial sectors, down one from the previous month.”Judging from the current data, China will adopt a proactive fiscal policy and a prudent monetary policy to stabilize the overall economic and social situation.”In the opinion of Chen Hua, dean of contemporary Finance Institute of Shandong University of Finance and Economics, the next stage should promote positive fiscal policy to improve efficiency, improve the efficiency of fiscal fund use, and pay attention to prevent local government hidden debt risk, ensure fiscal sustainability, and guard against fiscal risk to financial risk.”In pursuing a prudent monetary policy, we need to focus on sufficient, targeted and front-of-the line measures to avoid indiscriminate monetary policy and meet the rational and effective financing needs of the real economy.”