China's November CPI rises sharply and food prices tend to stabilize

The price of goods not only reflects the operation of the macro economy, but also directly affects the food, clothing and housing of the people. In 2011, the rapid rise in prices caused the Party Central Committee and the State Council to attach great importance to it. It proposed to stabilize prices as the primary task of macro-control, and introduced a series of policies and measures to maintain the steady and healthy development of the economy and safeguard the lives of the people. With the gradual improvement of these policies and measures, the price increase in the country has experienced a full and substantial decline. The overall price level has remained basically stable, and the initial effect has been achieved in controlling commodity prices and ensuring people's livelihood.

The CPI rose sharply back down The data released by the National Bureau of Statistics on the 9th showed that the national consumer price index (CPI) rose by 4.2% year-on-year in November, a sharp drop of 1.3 percentage points from the previous month, the lowest increase this year. This laid a good foundation for the stability of the general price level throughout the year.

This round of price increases did not actually begin this year but began at the end of 2009. At that time, as China’s economy continued to recover after the international financial crisis was overcome, CPI turned negative from November to December, rising by 0.6% year-on-year, and then went all the way higher. It reached a new high in price growth this November. In January of this year, CPI continued to rise from a 4.9% year-on-year increase, reaching 5.5% in May, and in July it hit a peak of 6.5% this year.

After July, the year-on-year increase in CPI began to gradually decline as the effect of price regulation became apparent. In August, the price rose slightly to 6.2%, and it continued to fall back to 6.1% in September. After October, the rate of decline began to increase, quickly falling back to 5.5% in October, and fell sharply to 4.2% in November.

From the point of view of statistical indicators, monthly price year-on-year data reflect the price changes of this month compared with the same month of last year. The ring comparison data reflects the price changes of this month compared with the previous month. Therefore, the ring data can be more timely and accurately. Reflecting the latest price changes, it is also closer to the feelings of the public.

In November, the CPI ring price dropped by 0.2%. It can be said that from a cyclical point of view, consumer prices have fully entered the downtrend channel of declines. From a short-term perspective, price levels have shown signs of decline, and macroeconomic control that maintains a generally stable overall price level has achieved remarkable results.

Food prices tend to stabilize The reason why this round of price increase is particularly affecting people's hearts is mainly due to the fact that during this round of price increases, food prices have become the most significant, accounting for about 70% of all price increase factors. People who feel the highest prices for food prices feel the most direct response.

Grain prices are stable, and prices are stable. Since the beginning of this year, the Party Central Committee and the State Council have attached great importance to agricultural production and proposed that we must resolutely implement the "rice bag" governor responsibility system and at the same time further increase the support for grain production. Governments at all levels have actively carried out actions to stabilize and increase grain production. The support of science and technology has been significantly increased, and the agro-climatic conditions are also generally preferred. In 2011, China's grain production regained a bumper harvest, achieving an “Eight increase” and a total grain output of 550 million tons. This laid a solid foundation for the basic stability of grain prices in China, and also made a positive contribution to stabilizing the overall price level.

Pork is one of the “culprits” in the current rise in food prices, and it is also a “respector” of the recent price increase. In June, the price of pork rose by 57.1% year-on-year, affecting the total price level by 1.37 percentage points; in July, the price of pork rose by 56.7%, affecting the overall price level by 1.46 percentage points; in August, the price of pork rose by 45.5%, affecting prices. The total level rose by about 1.27 percentage points. By November, the year-on-year increase in pork prices had fallen sharply to 26.5%, affecting the overall price level by about 0.78 percentage points. More importantly, after July, the price of pork was gradually reduced month-on-month. By October, there was a good momentum of a 1.8% drop in the chain price. In November, the chain's decline rate was expanded to 5.3%, and it has already entered a clear downward path, which in turn drove the fall in food prices and even price increases.

Since the beginning of this year, the Party Central Committee and the State Council have further increased the support for pig production, strengthened the construction of public pig epidemic prevention systems, and further supported the construction of large-scale standardized farms and communities. At the same time, under the stimulation of the sharp rise in pork prices in the previous period, the enthusiasm of farmers to increase the bar has been further increased. The number of live pigs in the country has continued to increase since February of this year, reaching 475.16 million in October, which will benefit the later pork prices. relatively stable.

At the same time, the prices of meat, poultry and their products fell by 2.6% month-on-month in November. The price of eggs dropped 4.0% month-on-month, and the price of aquatic products fell by 0.7% month-on-month. The above three items combined affected the overall level of consumer prices by a drop of approximately 0.27%. The current price drop has contributed immensely.

The increase in price prices fell back to a sharp drop in the year-on-year increase in food prices and CPI. Since the beginning of this year, both the producer price (PPI) and the increase in housing prices have also dropped significantly. From a whole point of view, it can be said that the total price level of the whole society has risen. It has already gone down and the inflation pressure has weakened.

There is a close relationship between the price of production materials, the ex-factory price of industrial producers (PPI) and the CPI. In general, changes in the prices of production materials will directly lead to changes in the PPI, which will gradually be transmitted to changes in the CPI over time. Since the second half of this year, under the influence of a series of policies to ensure supply, smooth circulation, and strong supervision, the prices of production materials and PPI have gradually declined, which has contributed greatly to the stability of the overall price level.

PPI growth began to fall gradually after reaching a 7.5% peak this year in July, falling back to 7.3% in August, continuing to fall to 6.5% in September, falling back to 5.0% in October, and falling sharply to 2.7% in November. In the PPI, the ex-factory price of production materials in July rose by 8.4% year-on-year, and the ex-factory price of living materials rose by 4.8% year-on-year. By November, the increase has dropped to 2.6% and 3.1% respectively.

From the ring data that can more accurately and timely reflect the latest price changes, the PPI began to fall from the rise in October, and continued to decline in November. The current decline in the PPI ratio indicates that there is more room for price reduction in the prices of products in the supply market in the later period, which will be conducive to the decline in the sales prices of consumer goods in the later period and will be conducive to the overall stability of the general price level throughout the year and in the period up to now.

According to international practice, housing prices are not counted in the CPI statistics category, but they have a close relationship with CPI, because the continuous rise in house prices will make ordinary people feel “out of the box”, the purchasing power will drop, and inflation expectations pressure will increase. Since the beginning of this year, the Party Central Committee and the State Council have relied heavily on boxing to curb excessive price increases on the one hand; on the other hand, they have vigorously promoted the construction of affordable housing and have worked hard to solve the housing problems of the people. Various places have also issued "restriction order" and "limit order", focusing on curbing speculative and investment purchases. At present, real estate prices are moving toward a reasonable return.

In November, of the 70 large and medium-sized cities, there were 49 cities with a quarter-on-quarter decline in housing prices, 16 cities with flat cities, and only 5 cities with a month-on-month increase in prices, and neither of which had risen more than 0.2%. From the same period of last year, there were 4 cities with falling prices, and 61 cities with falling prices. In November, there were 61 cities with a year-on-year increase of 5.0% or less.

The impact of price rises has been reduced to a minimum. In economic and social development, price fluctuations are a normal economic phenomenon. However, if prices are too high and prices rise too fast, people’s lives will be overstressed, uneasy, and even cause panic. If no measures are taken, inflation will once run out of control, which will have a great impact on the national economy. This will especially affect the living standards of low- and middle-income residents and cause social instability.

Increasing the income of ordinary people is an important way to offset the impact of rising prices. Since the beginning of this year, the number of urban employment in China and the number of peasant workers going out to work have increased substantially, and the income growth of urban and rural residents has also exceeded the price increase. In the first three quarters, the per capita disposable income of urban residents was 16,301 yuan, a nominal increase of 13.7% over the same period of last year, and a real increase of 7.8% after deducting price factors; the per capita cash income of rural residents was 5875 yuan, a nominal increase of 20.7% over the same period of last year, and a real increase of 13.6% after deducting price factors. Both are higher increases in recent years.

China is a developing country and there is a relatively large group of people with difficulties. Among them, there are nearly 90 million urban subsistence allowances, rural subsistence allowances, special care recipients, rural five-guarantee supporters, and unemployment insurance workers. To resolve the impact of rising prices on the people, the most pressing issue is to solve problems for this group and ensure that their lives do not decline due to rising prices. To this end, the central government is stating that the overall level of price stability is the primary task of macro-control, and efforts are being made to ensure that the lives of low-income groups are not affected by the sharp rise in commodity prices.

Increase the subsidy. Before the Spring Festival in 2011, the central government allocated 10.4 billion yuan in funds, and each time a person with difficulties received a one-time Spring Festival living allowance of 100 yuan to 180 yuan.

Establish price linkage mechanism. Up to now, 31 provinces, autonomous regions, and municipalities have established a linkage mechanism linking social assistance and security standards with rising prices. Short-term price increases will temporarily subsidize prices for difficult people. As prices continue to rise, social assistance and security standards will increase. The range of subsidy objects mainly includes special care objects, urban and rural subsistence allowances, rural five-guarantee support objects, and unemployment insurance premiums, and 90 million low-income groups will benefit from this.

In December, price increases continued to fall and it is a foregone conclusion that the overall price level in the year will remain basically stable. The Central Government will continue to do everything possible to increase the income of the broad masses of the people and ensure that the living standards of low- and middle-income groups will not be reduced due to rising prices.

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