On May 16,2023 the State Council Information Office held a press conference to introduce the operation of the national economy in April.

At the press conference, a reporter from Pengpai News asked: The year-on-year performance of CPI and PPI in April was weaker than expected, especially with the intensification of PPI deflation. What are the reasons for this? How does the National Bureau of Statistics view future trends?

Fu Linghui, spokesperson for the National Bureau of Statistics and Director of the Department of Comprehensive Statistics of the National Economy, replied: Last month, at the first quarter press conference, I also mentioned that the current low price operation is mainly phased. Currently, there is no deflation in the Chinese economy, and overall, there will be no deflation in the next stage. From the perspective of CPI, since the beginning of this year, the year-on-year increase in CPI has generally declined, with a year-on-year increase of 0.1% in April and a decrease of 0.6 percentage points compared to the previous month. The decline in CPI is mainly due to some phased factors.

One is the decline in food prices. With the warming of temperature, the supply of fresh vegetables and fruits has increased, and the market price has dropped. Meanwhile, the overall supply in the pig market is sufficient. Since entering April, pork consumption has entered the off-season, and pork prices have declined, which has also driven down food prices. In April, food prices increased by 0.4% year-on-year, a decrease of 2 percentage points from the previous month.

Secondly, the reduction in energy prices has expanded. Since the beginning of this year, due to the sluggish global economic recovery and the overall trend of global energy prices falling, the export -oriented impact on domestic residents 'cons gasoline and diesel prices has become apparent. In April, the CPI showed a year-on-year decrease of 5.4% in energy prices, which declined compared to the previous month.

The third is the price reduction and promotion of some durable consumer goods in China. Since the beginning of this year, due to the expiration of preferential subsidy policies for automobiles at the end of last year, the emission standards of National VI B have been switched in July of this year, and the efforts by car companies to reduce prices and promote sales have increased. driving a downward trend in prices. We see that in April, the prices of fuel cars continued to decline month on month.

Fourthly, the year-on-year comparison base increased. Affected by factors such as the impact of the epidemic and the entry of pork prices into an upward cycle during the same period last year, the increase in food prices has expanded. Meanwhile, due to international geopolitical conflicts and the impact of the global epidemic, the high international oil prices last year drove up energy prices in CPI. Under the combined influence of these factors, the CPI increased by 2.1% year-on-year in April last year, an increase of 0.6 percentage points compared to March.

We know that food and energy prices are often subject to significant fluctuations due to short-term factors. It is more important to consider the overall price situation and, more importantly, the core CPI. From the perspective of core CPI, it showed a year-on-year increase of 0.7% in April, which is the same as the previous month and remains generally stable. From the current situation of core CPI, the 0.7% increase is still relatively low compared to before the epidemic. The important reason is that service demand is still recovering, and the related price increase is relatively low compared to the past.

As the economy and society return to normal operation, the demand for services has steadily expanded, and the price increases of tourism, transportation, accommodation, catering and other services have rebounded, driving the increase in service prices to some extent. In April, service prices increased by 1% year-on-year, an increase of 0.2 percentage points compared to the previous month, and have rebounded for two consecutive months. In the future, as the demand for service consumption increases, the price rebound will also push the core CPI growth back to a reasonable level.

From the next stage, it can be seen that the periodic low level of year-on-year CPI growth will continue. One reason is that after the normalization of China's economic and social operations, both supply and demand are improving, but the recovery of demand is still insufficient compared to the improvement of supply, especially in a complex and severe international environment.wherethe pull of external demand has weakened compared to the previous year. In the short term, market demand has a relatively limited impact on prices. Secondly, the international import impact may continue. Affected by the sluggish global economic recovery, international commodity prices have generally fallen compared to last year, which will also have a downward impact on domestic prices. The third factor is the weakening of tail curl. In the second quarter, the upward trend in prices from the previous year was 0.5 percentage points, a decrease of 0.4 percentage points from the first quarter.

However, overall, the operation of low price increases is phased. With the significant effect of expanding domestic demand policies and increasing economic activity, employment gradually improves, income increases, consumer confidence increases, and consumption scenarios resume and expand, it will drive CPI growth back to a reasonable level.

From the perspective of the PPI situation, since the beginning of this year, due to multiple factors at home and abroad, the year-on-year decline in PPI has continuously expanded, with a year-on-year decrease of 3.6% in April. The main influencing factors are as follows: firstly, the impact of international input factors. The prices of some bulk commodities in China are closely linked to the international market. Since the beginning of this year, they have been affected by the weak recovery of the world economy. International bulk commodity prices have declined, while domestic oil and non-ferrous prices have decreased. In April, the prices of the oil and natural gas extraction industry decreased by 16.3%, the prices of the chemical raw materials and products industry decreased by 9.9%, and the prices of the non-ferrous metal smelting and rolling processing industry have decreased by 8.6%. Secondly, there is insufficient market demand in some industries. After the normalization of economic operation, some industries have abundant production capacity supply, but market demand is relatively insufficient, and prices have decreased. For example, coal production capacity continues to be released, imports continue to increase, and demand for electric coal decreases seasonally. The market enters the off-season, and the price decline has expanded. In April, the prices of coal mining and washing industries decreased by 9.3%. China has sufficient steel production capacity, but market demand is still recovering, and prices have decreased. In April, the prices of black metal smelting and rolling processing industries decreased by 13.6%. Thirdly, the downward impact of last year's price change has increased. The impact of last year's price tailing in April was negative 2.6 percentage points, an increase of 0.6 percentage points compared to the downward impact in March.

From the next stage, it can be seen that the international import impact will continue, domestic market demand is still recovering, and the short-term downward trend of some industrial product prices will continue. However, with the recovery of the domestic economy and the recovery of market demand, the overall judgment shows that PPI is expected to gradually rebound in the second half of the year.