CPI Growth In July Exceeded 3% Again, And Industrial Growth Slowed Down.

The National Bureau of statistics will announce the economic data for July, which is also the first single month data released in the three quarter, which has important reference significance for the second half of the year's economic situation.

The market is more than expected, due to the increase of vegetable and fruit prices in the flood season, the CPI increase will exceed 3% in July. By the impact of last year's tail factors and the gradual decline of international commodity prices, the growth rate of PPI will continue to fall in July, while investment and industrial growth will steadily decrease, and consumption will continue to grow strongly.

Food price boost CPI

"This summer floods brought about a supply shock, which has a short-term impact on prices and is expected to increase by 3.5% in July," CPI said. Sun Mingchun, a macroeconomic analyst at Nomura Securities, believes that prices will gradually decline in the 9 and October after the end of the rainstorm season.

This expectation and CICC Xing Ziqiang, an analyst at the company's macroeconomic analyst, agreed that he told the first Financial Daily reporters that although the CPI of June was lower than the market expectations of 2.9%, but in July, the Ministry of Commerce and the Ministry of agriculture rebound in food prices, will pull the CPI chain rose. He predicted that CPI would be close to 3.4% in July.

According to the statistics of the national development and Reform Commission, the average retail prices of pork lean meat and eggs increased by 7.14% and 4.75% respectively in June in 36 large and medium-sized cities in July. The average price of the 21 vegetables increased by 11.9%, and the price rose obviously.

In particular, pork prices, the Xinhua national agricultural and sideline products and agricultural price quotes system monitoring showed that from the end of June this year, pork prices have been rising all the way, to August 1st, only the first decline in more than 30 days.

On the one hand, the price of vegetables and vegetables has risen directly from bad weather in China. On the other hand, the rise of international grain prices has also strengthened the inflation expectations of the market.

Former central bank monetary policy Fang Gang, a member of the Commission, recently admitted that the news of Russia's ordered export ban of grain exporting countries was worrying. He believes that because of overcapacity in China, the rise in non food prices is more difficult, but food prices are hard to control. If the international grain price rises sharply, it may have an impact on domestic grain prices.

Faced with the price pressure brought about by excess liquidity, in August 5th, the central bank issued the report on the implementation of China's monetary policy in the second quarter of 2010, pointing out that the current price situation is rather complicated. Despite the stable factors such as external recovery, the current inflation expectation and price risk can not be ignored.

Investment, industrial growth or slowing down

Judging from the leading indicators, the purchase price index in July continued to decline 0.9 percentage points to 50.4%, of which, petrochemical and steel prices dropped the top 3.7, and 8.9 percentage points to 29% and 32.9%, respectively, reflecting the decline in international raw material prices and easing domestic inflation pressure.

Xing Zi Qiang predicts that PPI growth will drop to 5.2% in July, which will also reduce the transmission of PPI to CPI.

In addition, the market expects that the growth rate of industrial production and investment will drop in July, and some policy positions may change. Some government investment projects will be implemented or accelerated in the second half of the year.

Xing Ziqiang believes that the impact of the strengthening of the local financing platform for new capital construction projects will continue to fall, and the recent regulation of the "two high one capital" industry also makes the investment in heavy chemical industry slow down. It is estimated that the fixed asset investment in urban areas will slow down to 25.2% over the same period 1~7 months.

By the slowdown in exports and the impact of investment downturn, the market is more than expected in July the growth rate of industrial added value continued to fall to 13% to 13.5% year-on-year growth rate.

Wang Tao, a Chinese economist at UBS Securities, expects that industrial production growth will continue to slow in the coming months as the real estate construction activity slows down and the government closs down backward production capacity, and will fall below 10% in the fourth quarter of 2010.

In fact, due to the outbreak of the European sovereign debt crisis and the superposition of domestic real estate regulation policies, the slowdown in investment and industrial added value growth in the second half of this year has basically become the consensus of the market. The market expects that the growth of China's economic growth in the second half of the year will be affected by the risk factors. {page_break}

Zhang Liqun, a researcher at the Ministry of macroeconomic development of the State Council Development Research Center, said publicly at the beginning of this month that as the domestic and international market environment has improved significantly compared with the same period last year, the leeway of policy has obviously increased. With the support of these factors, the economic growth rate of the future will gradually become stable, and the annual economic growth rate can be maintained at around 9.5%.

Hao Daming, a macroeconomic analyst at Minsheng securities, also agreed. He told reporters that following the government's commitment to increase investment in affordable housing, the state launched investment in strategic emerging industries and investment in the development of the western region, which led to the formation of a new round of government investment. This part of the investment will be gradually implemented in the second half of the year, and partly alleviate the downward pressure on the economy.