Why China'S CPI Should Be Controllable

The consumer price index (or CPI) of March has been released this year. In March, the CPI rose by 2.3%, while in January to March, the overall CPI level rose by 2.1% compared with the same period last year. It was lower than the 2.5% increase expected by the market. The main factor affecting the CPI increase in March was food, tobacco and alcohol. In March, the price of food, tobacco and alcohol rose by 6.0% year on year, affecting the CPI rise by about 1.78 percentage points. Among them, the price of fresh vegetables increased by 35.8%, which affected the CPI increase by about 0.92 percentage points; The price of livestock and meat rose by 16.5%, affecting the CPI by 0.69 percentage points (the price of pork rose by 28.4%, affecting the CPI by 0.64 percentage points); Grain prices rose by 0.5%, affecting CPI growth by about 0.01 percentage points. The price of transportation and communication fell by 2.6%.

As CPI will control the level below 3% this year, when the one-year deposit interest rate is 1.5%, it is a constraint to increase the central bank's further interest rate cut. Of course, I don't think it's a case of meeting and calling.

From the perspective of the factors affecting the CPI increase in March, it is mainly food, tobacco and alcohol. The price of fresh vegetables and pork, in particular, rose by 35.8% and nearly 28.4% respectively, which have the greatest impact. Some people say that China's CPI is basically based on the pig cycle, that is, rising pork prices are likely to lead to rising CPI; If the price of pork falls, CPI will also decline. However, the situation in March reflected this, but compared with Market expectation The response should be smaller.

Because the rise of pork and vegetable prices in March was very obvious at the beginning of the month. According to the data released on March 9, the ex factory price of pigs rose more than 50% year on year, and it began to enter the "yellow warning zone". By the end of March, the price had reached a five-year high, approaching the historical peak in 2011. At that time, many economists were worried that if China's economy entered the "pig cycle", CPI might rise.

Also, the price of vegetables in most parts of China has risen sharply before the Spring Festival due to the Spring Festival. For example, green vegetables in Guangzhou rose by 50 yuan per kilogram at that time. This trend eased after the Spring Festival, but it rose again in March. For example, if Beijing people want to eat Shandong green onion, it will cost 10 yuan for two, and it will cost more than 10 yuan for one kilogram of vegetable heart in Guangzhou.

In addition, according to the data of the "weighted average price of vegetables" in Beijing, the average price of vegetables in March increased by more than 50% compared with the same period last year. The price rise this time is different from that in the past. This round of crazy increase in vegetable prices is also reflected in the fact that the price of northern vegetables rose in spring in previous years, and the south will send a large number of vegetables to the north to stabilize the market price. But this year, the south has rushed to the north to grab vegetables because of the low temperature and rainy weather in the south.

All this shows that the rising trend of pork price and vegetable price has not changed since this year, and the rising range will be larger in March, such as pork. Because the market analysis shows that the actual CPI increase may be higher than the published data. At the same time, this situation also shows that the current rising trend of CPI has gone beyond the concerns of many people deflation However, the number of people explained that it would not rise rapidly, even if China's economy entered the "pig cycle". Because China's CPI is controllable.

Why China CPI Want to be controllable? Since last month, China's CPI has risen to 2.3%, while the one-year deposit interest rate of residents is 1.5% and the real interest rate is negative 0.8%. In other words, China has entered a stage of serious negative interest rates. If CPI rises faster, the negative interest rate of residents' deposits will be higher. If the negative interest rate, which is caused by the direct control of the People's Bank of China on the interest rate of commercial banks, is too high, it will not only seriously restrict the monetary policy of the People's Bank of China, that is, the People's Bank of China cannot make monetary policy more relaxed by adjusting interest rates, but also a wealth transfer mechanism for bank depositors. This wealth transfer mechanism not only tends to drive more resident deposits out of the banking system, but also leads to more rampant liquidity in China's financial market. The overflow of liquidity in China's financial market is the source of instability and risk in China's financial market. The central bank is unwilling to see these two aspects. Therefore, it is better to stabilize CPI at a certain level.