In May, the CPI increased by 0.3% year-on-year, and the overall price level remained stable with a slight increase


According to data released by the National Bureau of Statistics on June 12th, the overall price level in China remained stable with an increase in May. The National Consumer Price Index (CPI) increased by 0.3% year-on-year, the same increase as last month; A month on month decrease of 0.1%. The National Producer Price Index (PPI) for industrial producers decreased by 1.4% year-on-year, which is 1.1 percentage points narrower than the previous month; The month on month increase was 0.2%, marking the first positive turn since November last year. Dong Lijuan, Chief Statistician of the Urban Department of the National Bureau of Statistics, stated that in May, the overall operation of the consumer market was stable, and the national CPI decreased seasonally on a month on month basis, with the same year-on-year increase as last month. Excluding food and energy prices, the core CPI increased by 0.6% year-on-year, continuing to maintain a moderate increase. From a month on month perspective, CPI decreased by 0.1%, slightly less than the same period in the past decade. Among them, food prices have remained stable, down 1% from the previous month. Among the food products, the prices of fresh fruit, eggs and pork rose by 3.0%, 2.7% and 1.1% respectively due to factors such as rainstorm in the south. Non food prices have decreased by 0.2% from a 0.3% increase in the previous month. Zhang Xuewu, Director of the Analysis and Prediction Department of the Price Monitoring Center of the National Development and Reform Commission, analyzed that after the May Day holiday, prices of air tickets, tourism, and other services have fallen to varying degrees, affecting a slight overall decrease in service prices compared to the previous month. In addition, due to the impact of the international oil price downturn, domestic refined oil prices have decreased by about 1%, coupled with car price reductions and promotions, which have to some extent affected the decline in transportation and communication prices. From a year-on-year perspective, CPI has risen by 0.3%, marking the fourth consecutive month of positive growth since February. Food prices have decreased by 2.0%, a decrease of 0.7 percentage points from the previous month. Among them, the price increase of pork, freshwater fish, and fresh vegetables has expanded, while the price decrease of eggs, fresh fruits, and edible oil has narrowed. Non food prices increased by 0.8%, a decrease of 0.1 percentage points from the previous month. Wen Bin, Chief Economist of China Minsheng Bank, stated that the CPI in May showed characteristics of "strong food, weak energy, and stable core". The price of pork has turned upward due to the continuous production capacity depletion for 15 consecutive months, and the price of pork has remained stable during the off-season, providing support for food prices. Zhang Xuewu stated that among the eight categories of goods and services that make up CPI, except for the decrease in food and transportation and communication prices, the prices of the other six categories have all increased year-on-year, indicating that the current trend of recovering consumer demand among residents continues to consolidate. In May, due to factors such as the rise in prices of some international commodities and the improvement of supply and demand in the domestic industrial product market, the national PPI changed from a decrease to an increase on a month on month basis, and the year-on-year decline narrowed. From a month on month perspective, the PPI has shifted from a decrease of 0.2% in the previous month to an increase of 0.2%, changing the continuous downward trend in the first six months. Among them, the price of means of production decreased by 0.2% last month and increased by 0.4%; The price of living materials decreased by 0.1%, the same as last month. Affected by the rising prices of non-ferrous metals in the international market, the prices of domestic non-ferrous metal smelting and rolling processing industries have increased by 3.9%. Policies such as large-scale equipment updates are gradually being implemented and taking effect. The steel market is expected to improve, and the prices of black metal smelting and rolling processing industries have increased by 0.8%. From a year-on-year perspective, PPI decreased by 1.4%, which is 1.1 percentage points narrower than the previous month. Among them, the price of means of production decreased by 1.6%, with a narrower decrease of 1.5 percentage points; The price of living materials decreased by 0.8%, with a narrowing of 0.1 percentage points. Wen Bin stated that global energy prices rebounded in May due to the market's blunt impact on geopolitics and the impact of the US economic slowdown. However, prices of non-ferrous metals, represented by copper, continued to rise under the expectation of growth in AI computing power, chip and electricity investment. The domestic industrial product prices have been affected by external transmission, and some product prices have rebounded month on month. Moreover, last year's base has significantly decreased, which is conducive to the recovery of year-on-year growth this year. At present, the overall price level in China is still at a low level, reflecting the challenges that the economy still faces in terms of insufficient effective demand and significant pressure on business operations. Wen Bin believes that from the price performance of residents on the consumer side in May, the current recovery of consumer demand in China still shows a "holiday pulse" effect, and the long-term general core consumer demand center is still weak, while the influence of the supply side such as pork is gradually accumulating. Looking ahead to the next stage, if there is no unexpected significant increase in pork prices, it is expected that the CPI will remain in the range of 0.3% to 1% in the second and third quarters. Feng Lin, Director of the Research and Development Department of Dongfang Jincheng, stated that as of May, the PPI of means of living has been declining for eight consecutive months on a month on month basis. The core reason is the lack of consumer confidence among residents, weak consumer demand, and insufficient motivation for the increase in factory prices of consumer goods. Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, believes that the current low levels of domestic consumer and producer prices reflect weak domestic effective demand relative to production supply, especially in some industries where terminal demand is insufficient and sales prices are low. Some industry enterprises also face pressure in terms of production costs and financing. Subsequent policies need to focus on both supply and demand, while promoting steady recovery of consumption, and continuing to provide precise assistance and support to industries and enterprises that are temporarily in difficulty. Zhang Xuewu stated that as China's economy continues to recover and improve, policies such as large-scale equipment upgrades and trade in consumer goods to promote household consumption and expand effective investment are further implemented and effective. Domestic demand will continue to recover, and it is expected that the overall price level will maintain a moderate upward trend. (Lai Xin She)

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