CPI Turns And It Is Hard To Drop &Nbsp; Where To Go From Negative Interest Rates?

Data released by the National Bureau of statistics on 14 may show that China's consumer price index (CPI) increased by 6.1% in September, up 0.1 percentage points from the previous month.

Although the market generally thinks that the inflection point of CPI has passed, however, the high interest rate data continue to make the real negative interest rate continue. With food prices going down steadily, economic growth is stable, resulting in a decline in overall demand. The fourth quarter inflation level will probably fall significantly.

Cost rising price Difficult to descend

From the past data, China's CPI has come to an inflection point in August. The 6.2% year-on-year increase in this month has been reduced by 0.3 percentage points compared with the previous month's 6.5% increase, ending the momentum of CPI expansion.

However, after the inflection point, the decline of CPI has narrowed. CPI rose by 0.1 percentage points in September compared with the previous month.

Judging by categorical data, the rise in food prices still tops the list. Food prices rose 13.4% in September. The price of meat and poultry and its products is the biggest increase in food, up 28.4% over the same period. The price of pork has increased by 43.5% over the past year, affecting the overall price level by about 1.24 percentage points.

E Yongjian, a researcher at 4.59,0.00,0.00%, thinks that inflation The pressure reduction is mainly from the tail up factor, but the new price factor is still at a high level, and domestic inflation expectations are still strong.

In fact, the new price increase factor is more reflected in the price chain data. In September, the non food price rose by 0.2%, the total consumer price level rose by about 0.10 percentage points, while the food price chain rose by 1.1%.

Imported inflation pressure does not decrease.

In the global economy, there may be "two bottom" and European debt The crisis continued to ferment, while commodity prices on the international market plummeted in September.

Data showed that the CRB index, which tracks international commodity prices, fell by more than 13% in the whole month, and the composite index of the average price of most of the listed commodities in the domestic market also dropped by 10%. Both of them hit the biggest monthly decline since October 2008.

In late September, the international gold price fell below the three big integer mark of 1800 US dollars, 1700 US dollars and 1600 dollars per ounce for three consecutive trading days.

Moreover, oil prices in London and New York also fell by 10%, hitting the biggest monthly decline since the financial crisis. Affected by the continuous decline of international oil prices, the development and Reform Commission announced that the maximum retail price of refined oil will be reduced by 300 yuan / ton from 0:00 in October 9th. This is the first time that China's refined oil prices have been cut for the first time in 16 months.

Although commodity prices have fallen sharply and refined oil prices have also been cut down on schedule, we still can not take lightly for imported inflation pressure. From the data released on the 14 day, the producer price of industrial producer was unchanged from the previous month, an increase of 6.5%.

When will negative interest rates turn right?

On the one hand, inflation remained high and remained above 6% for 4 consecutive months. On the other hand, the pace of raising interest rates in China's monetary policy seemed to come to an end, and the spread between inflation and nominal interest rates remained at a high level.

In fact, since the CPI rose to 2.7% in February 2010, the price data have been higher than the one-year deposit interest rate for 20 months.

Although the central bank has increased interest rates five times since October of last year, the current one-year deposit rate of 3.5% is still lower than the current 6.1% CPI data by about 2.6 percentage points.

Chen Feixiang, director of Applied Economics Department of An Tai School of economics and management, Shanghai Jiao Tong University (micro-blog), believes that changing the negative interest rate state is imperative for optimizing the overall macro-economic operation pattern. "Fundamentally speaking, strictly controlling the flow of money is the key to controlling inflation and reversing the level of negative interest rates."

Although monetary policy may not continue to shrink in the short term, CPI is still at a high level, but some micro data show that the pressure of rising prices is gradually declining, and the real negative interest rate will gradually decrease in the fourth quarter.

According to the latest announcement of the average price changes of major foods in 50 cities in the first ten days of October, the price of pork decreased by 0.25% compared with the last ten days of September.

Pork prices continued to decline in the last three weeks of September, while pork prices remained stable after July, corresponding to year-on-year growth.

Jiang Chao, chief macroeconomic researcher of Guotai Junan (micro-blog), said inflation will drop significantly after October. "Demand factors have greater impact on inflation. At present, not only the economic growth rate has dropped, but also the industrial price PPI and CPI's non food price fall trend is very clear, while the price of CPI food is still high, but the increase has obviously slowed down. CPI and PPI are expected to fall to around 4% at the end of the year.