In August, year-on-year CPI and month on month PPI changed from negative to positive - China's overall price level stabilized and rebounded
According to data released by the National Bureau of Statistics, in August, the national consumer price index increased by 0.1% year-on-year, transitioning from a decline to an increase; The month on month increase was 0.3%, an increase of 0.1 percentage points from the previous month. The ex factory price index of industrial producers decreased by 3.0% year-on-year, narrowing by 1.4 percentage points compared to the previous month; The month on month increase was 0.2%, marking the first time this year that it has turned positive.
"In August, the overall price level in China stabilized and rebounded." Zhang Xuewu, Director of the Analysis and Prediction Department of the Price Monitoring Center of the National Development and Reform Commission, believes that in the future, with the continuous improvement of the economy, the Mid Autumn Festival and National Day holidays will drive steady recovery in consumer demand, infrastructure construction will enter the peak season, and enterprise production demand will also be further released. It is expected that CPI will continue to rebound in the later period, and the decline in PPI will further narrow.
The same proportion of CPI has returned to positive growth
Dong Lijuan, Chief Statistician of the Urban Department of the National Bureau of Statistics, stated that in August, the consumer market continued to recover, supply and demand relations continued to improve, and the month on month increase of CPI slightly expanded, turning from a decrease to an increase year-on-year. From a month on month perspective, CPI rose by 0.3%, an increase of 0.1 percentage points from the previous month. Among them, food prices decreased by 1.0% last month and increased by 0.5%, affecting the CPI increase by about 0.1 percentage points. From a year-on-year perspective, the CPI decreased by 0.3% last month and increased by 0.1%. Among them, food prices decreased by 1.7%, the same decrease as last month, affecting a decrease of approximately 0.31 percentage points in CPI. Non food prices have increased by 0.5% compared to the previous month, affecting a CPI increase of approximately 0.41 percentage points. The core CPI, excluding food and energy prices, increased by 0.8% year-on-year and remained stable.
Wang Qing, Chief Macro Analyst of Dongfang Jincheng, believes that there are three main reasons why the year-on-year CPI in August turned positive as scheduled. Firstly, the month on month pork price increased by 11.4% compared to the previous month, which narrowed the year-on-year decrease in pork price by 8.1 percentage points compared to the previous month. This also drove the month on month food price to increase, and the year-on-year decrease did not further expand. Secondly, due to the rise in international crude oil prices, domestic gasoline prices increased by 4.9% month on month in August, with a year-on-year decrease narrowing by 8.9 percentage points, driving a slight increase in non food prices that month. Thirdly, the demand for summer travel consumption has increased, driving the year-on-year increase in service consumption prices in August from 1.2% last month to 1.3%.
Pang Ming, Chief Economist and Director of Research at JLL Greater China, believes that both CPI and PPI increased month on month in August, indicating that with the moderate stimulus, reasonable easing, timely strengthening of various macroeconomic policies, and further release of space for countercyclical regulation, the effect of various incremental measures on expanding domestic demand is constantly evident, and the trend of further balance between supply and demand is more obvious. "Although the year-on-year CPI returned to positive growth in August, it will continue to operate at a low level in the short term, and the phenomenon of low price levels will continue until the end of the year. This means that macroeconomic policies are expected to further increase consumption promotion in the later stage, and the urgency is also increasing." Wang Qing said.
PPI turned positive for the first time this year compared to the previous month
In August, due to factors such as improved demand for some industrial products and rising international crude oil prices, the month on month PPI turned higher, and the year-on-year decline narrowed.
From a month on month perspective, the PPI decreased by 0.2% last month and increased by 0.2%. Zhang Xuewu stated that due to factors such as Saudi Arabia's production reduction and increased demand for summer travel, the rise in international oil prices has driven domestic energy extraction and processing industry prices to rise by more than 5% month on month; The construction progress of domestic infrastructure projects has accelerated, coupled with increased policy efforts to boost market expectations, and the demand for replenishment in some industries has increased. The prices of major industrial products such as iron ore, copper, and aluminum have risen by 0.4% to 1% month on month.
From a year-on-year perspective, the PPI decreased by 3.0%, which is 1.4 percentage points narrower than the previous month. "The year-on-year decline in PPI in July and August has continuously narrowed, and June has been basically confirmed as the bottom of the PPI year-on-year growth cycle," said Wen Bin, Chief Economist of China Minsheng Bank.
Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, believes that the improvement in inflation data in August, combined with the previously announced expansion of new orders for domestic manufacturing PMI, reflects the strengthening momentum of domestic demand recovery. The improvement of the ex factory price index of industrial enterprises is faster than that of the purchase price index, which is also reflected in the improvement of domestic market demand. With policy support, the overall operating conditions of the industrial sector are improving. Previously announced industrial profits, capacity utilization, and manufacturing production have all shown an improvement trend.
Still need to maintain policy momentum
"After a brief negative growth in July, the year-on-year increase in CPI in August confirmed that after a series of countercyclical policies, the demand for residents in China has rebounded." Wen Bin believes. At the same time, the core CPI remained stable on a month on month basis, with unchanged year-on-year growth, strong services but weak commodities, overall stability but not necessarily strong. Therefore, it is necessary to continue to maintain the policy of stabilizing growth and expanding domestic demand.
Pang Ming also stated that the growth momentum of some consumer categories is not yet stable, and market consumer confidence still needs to be further boosted. Macro policies should still focus on expanding domestic demand, boosting confidence, and preventing risks in the future. Considering the need to protect effective demand and the high real interest rates in the context of insufficient inflation, it is necessary and possible to further lower interest rates after the opportunity window for reserve requirement cuts in September. Zhou Maohua believes that the current economy is still in the stage of repair and recovery, and the overall domestic economy still needs more proactive policy support.
Wen Bin believes that the recent introduction of stable growth policies, especially the increase in the standard for personal income tax special surcharges and the reduction of interest rates on existing housing loans, will promote income growth for residents, stimulate consumer demand, and drive core inflation to recover. The combination of policies such as supporting the development of the private economy, stabilizing employment to a strategic height, implementing a package of real estate policies, strengthening strategic emerging industries, and activating the capital market will also play a positive role, and China's economic fundamentals will continue to improve.
