Price levels are closely tied to economic performance and impact people's daily lives. What has been the trend of China's price movements this year?
Data released on the 9th by the National Bureau of Statistics shows that in the first half of the year, the national Consumer Price Index (CPI) increased by 1.0 percent year-on-year, while the core CPI, which excludes food and energy prices, rose by 1.2 percent year-on-year. The Producer Price Index (PPI) increased by 1.5 percent compared to the same period last year.
"Since the beginning of this year, consumer prices have continued the moderate recovery trend seen since the fourth quarter of last year. The year-on-year CPI has remained in the moderate growth range of 1 percent or above for five consecutive months, with both the CPI and core CPI operating relatively stably and showing a gentle upward trend," said Liu Fang, a researcher at the Market and Price Research Institute of the National Development and Reform Commission.
Liu Fang analyzed that the moderate year-on-year recovery in CPI is due, on one hand, to macro policies such as expanding domestic demand taking effect and the positive results achieved in comprehensively addressing 'cut-throat' competition, which have improved the domestic market's supply and demand structure. On the other hand, it is also influenced by a combination of seasonal fluctuations and external imported factors.
On a month-on-month basis, the CPI in June fell by 0.3 percent, ending the pattern of alternating increases and decreases seen in previous months and marking a second consecutive month of month-on-month decline.
Dong Lijuan, chief statistician at the Department of Urban Surveys of the National Bureau of Statistics, analyzed that this was mainly influenced by seasonal factors and fluctuations in international market prices.
"With the abundant supply of seasonal fruits and vegetables in the market, the prices of fresh vegetables and fresh fruits in June fell by 1.0 percent and 2.0 percent, respectively, collectively affecting the month-on-month CPI decline by about 0.06 percentage points. Influenced by factors such as airlines reducing fuel surcharges and a seasonal dip in travel demand, prices for hotel accommodation, air tickets, and travel agency fees also declined," Dong Lijuan said.
Additionally, affected by international market price fluctuations, domestic gold jewelry and gasoline prices fell by 8.7 percent and 4.9 percent, respectively, with the decline rates expanding by 5.9 and 4.6 percentage points compared to the previous month. Their downward pull on the CPI further increased compared to last month.
Regarding the PPI, since the beginning of this year, influenced by both international and domestic factors, industrial product prices have continued the gradual recovery trend seen since the second half of last year. In the first half of the year, China's PPI increased by 1.5 percent year-on-year.
Xu Guangjian, Vice President of the China Price Association, stated that since the beginning of this year, influenced by fluctuations in international prices of crude oil and other bulk commodities, prices of domestic upstream products such as petroleum, natural gas, coal, and chemical raw materials have risen significantly, becoming one of the factors driving the recovery in PPI.
"Recent declines in international crude oil prices have led to price decreases in related domestic industries. In June, the PPI ended its eight consecutive months of month-on-month increases, turning to a month-on-month decline of 0.3 percent. If international market prices for oil and other energy sources continue to stabilize, the imported inflationary impact is expected to gradually weaken. The subsequent trend of PPI will depend more on the improvement of the domestic market's supply and demand structure," analyzed Xu Guangjian.
The optimization and upgrading of the domestic industrial structure also provided endogenous support for the PPI recovery. With the continuous expansion of application scenarios for artificial intelligence, the widespread use of new raw materials and materials, and the ongoing push for green transformation, in June, the manufacturing price of virtual reality equipment increased by 8.4 percent month-on-month, the manufacturing price of electronic special materials rose by 2.5 percent, and the price for the comprehensive utilization of waste resources increased by 0.4 percent.
Liu Fang indicated that the price recovery in these sectors reflects the continuous strengthening of the supportive and leading role of the new economy and new growth drivers. This is not only conducive to stimulating production expansion and demand growth in related fields but also forms positive support for product price recovery and improvement in corporate profits.
"It is noteworthy that in June, the year-on-year increase in PPI further expanded to 4.1 percent, while the CPI remained stable at 1.0 percent. This indicates, on one hand, that prices of important livelihood commodities remain stable, and on the other hand, it suggests that price increases for upstream production materials are relatively pronounced, necessitating attention to the phased cost pressure this brings to midstream and downstream enterprises," said Xu Guangjian.
Wang Guanhua, a spokesperson for the National Bureau of Statistics, stated that in response to cost changes, many enterprises are taking proactive measures to enhance efficiency and offset pressure through methods such as technological transformation, refined management, and market expansion. Relevant departments and regions are also continuously implementing and refining policies to assist enterprises, supporting large-scale equipment renewal and transformation, and taking measures to reduce costs for enterprises related to energy use and logistics, with the effects expected to gradually become apparent.
Recently, various departments and regions have been actively working to ensure supply and stabilize prices.
As the critical flood season approaches, many areas are increasing emergency supply efforts to ensure that essential livelihood commodities are not out of stock or unavailable. Regions are closely monitoring the dynamics of the live hog market and implementing regular and precise regulation of hog production capacity. The National Energy Administration is strengthening monitoring and early warning for factors such as water inflow to hydropower stations and coal and gas supplies to power plants, promoting the full deployment of power supply sources for security, and actively preparing for energy supply during the peak summer consumption period.
"In the next stage, the international environment will remain complex, but China has ample supply of important livelihood commodities, relatively smooth connections across production, transportation, and sales links, a continuously improving policy system for ensuring supply and stabilizing prices, and enhanced capabilities for price monitoring, early warning, and emergency regulation. There are many favorable conditions for maintaining stable price operations, and consumer prices are expected to maintain a moderate upward trend," said Wang Guanhua.
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