Prices are the barometer of economic operation. On June 10th, the National Bureau of Statistics released data showing that in May, the Producer Price Index (PPI) for industrial producers increased by 3.9% year-on-year, rising for three consecutive months and reaching a new 46 month high; The Consumer Price Index (CPI) rose by 1.2% year-on-year, unchanged from April. The "scissors gap" between PPI and CPI widened to 2.7 percentage points, reflecting the structural differentiation trend of moderate and weak consumer prices and steady upward industrial prices in the current economic operation.
The "scissors gap" between PPI and CPI continues to widen, reflecting the current situation of strong supply and weak demand in the consumer market. At present, domestic terminal consumer demand is still in a steady recovery stage, with upstream raw material prices continuing to rise, and manufacturing enterprises in the middle and lower reaches facing dual pressures of rising costs and restricted product price increases.
In this context, the author believes that efforts should be made to unblock price transmission bottlenecks and coordinate the balanced development of upstream and downstream industries.
Monetary policy can maintain reasonable and sufficient liquidity, and continue to provide relief and assistance to market entities. The fiscal policy will continue to rely on forward efforts, accelerate the issuance and use of ultra long term special treasury bond and local special bonds, and solidly promote the construction of major projects, equipment renewal, and consumer goods trade in. This will not only form an effective amount of investment in kind, but also continue to activate the consumer market, and consolidate the foundation for domestic demand growth.
Industrial policies can be classified and guided, and coordinated efforts can be made to balance industrial transformation and upgrading with the smooth operation of the industrial chain. On the one hand, we will continue to increase support for fields such as computing power, new energy, and high-end equipment, consolidate the positive trend of industrial upgrading, and cultivate new driving forces for economic growth; On the other hand, it is necessary to closely track fluctuations in commodity prices, stabilize the industrial and supply chains, optimize production capacity structure, prevent upstream price fluctuations from being transmitted downstream, and promote balanced development of the entire industrial chain. For the practical difficulties faced by small and medium-sized enterprises, measures such as tax reduction and fee reduction, financing support, etc. can be taken to stabilize market expectations.
Based on multiple factors, prices are expected to improve overall in the second half of the year. From the perspective of CPI, with the gradual decline in the number of live pigs slaughtered and the release of holiday consumption demand, the prices of pork, eggs and other food products will gradually stabilize and rebound, and the sustained recovery of service consumption will also drive a moderate upward trend in CPI. From the perspective of PPI, factors such as fluctuations in international energy prices, geopolitical situations, and capacity optimization adjustments will still provide support, but terminal demand will also constrain the increase in industrial product prices. Due to the impact of changes in base numbers, the overall pace of price fluctuations will become more stable in the future.
Looking at the long term, China's economy has strong resilience, great potential, and abundant vitality. The long-term positive fundamentals have not changed, and the macroeconomic policy toolbox is still abundant and sufficient. Despite the objective existence of input pressure caused by current international energy price fluctuations, the domestic supply system is complete, the ability to ensure the supply of energy and livelihood commodities is solid, the industrial chain, supply chain, and circulation system operate smoothly, and the effectiveness of policies to ensure supply and stabilize prices continues to emerge. With the effective implementation of various measures to boost consumption and expand domestic demand, the circulation of the national economy will become smoother, the "scissors gap" between PPI and CPI will steadily narrow, and the foundation for maintaining stable prices will become more solid. (Looking into the New Era)