The Price Trend In 2011 Is Expected To Be "High Before And After Low".

In recent years, macro-control measures have been followed.

Subsequently, the National Bureau of Statistics announced the economic data for January on the 15 day, CPI grew by 4.9% over the same period last year.

Then, the central bank "on the go" announced on 18 th this year the second time to raise the deposit reserve ratio.

This fully shows that the current severe inflation situation has not been effectively alleviated.

In fact, just after entering the 2011, many data show that inflationary pressures are still increasing.

The latest statistics of the average price changes of major foods in 50 cities released by the National Bureau of statistics show that the prices of the vast majority of varieties in the 29 food prices monitored in late January of this year continue to rise, and vegetable prices are rising faster.

In addition, according to the "wholesale price index of agricultural products" released recently by the Ministry of agriculture, the wholesale price index of agricultural products increased by 10% in January, up 6.2% compared to the same month, and the wholesale price index of vegetable basket increased by 9% compared with the same period last year, rising by 7.3%.

Food prices rose significantly in January.

Therefore, the central bank chose to raise interest rates at the time just before the lunar new year, in order to cope with inflationary pressures and start the "first shot" of anti inflation throughout the year.

It should be said that after

Supply side: the impact of drought and labor shortage factors

1.

Drought affects the supply of agricultural products.

At present, China's summer grain producing areas suffer severe drought, and drought is serious in the main producing areas of Winter Wheat in eight provinces such as Shandong, Henan and Hebei.

According to the Ministry of agriculture data, as of February 9th, the drought area of Winter Wheat in eight provinces accounted for 42.4% of the sown area, and the area and yield of Winter Wheat in eight drought provinces accounted for more than 80% of the whole country.

Although the State Council has introduced 10 measures to support grain production, the drought will definitely affect the supply of agricultural products this year.

The price of food is closely related to inflation as food accounts for CPI1/3 share in China. Higher prices of food and related agricultural products mean higher inflation pressure.

2.

Labor shortage is raising wages.

"A few years ago,"

Two, demand side: liquidity is still plentiful.

The current inflation is the "disaster" caused by currency over the past two years.

According to the annual financial statistics report released by the people's Bank of China, China added 9 trillion and 590 billion yuan in 2009, which is more than two times the number of new loans in 2008. In 2010, loans increased by 7 trillion and 950 billion yuan, exceeding the red line of 7 trillion and 500 billion yuan.

China is the largest country with the largest money supply in the world.

Although the central bank has raised the reserve ratio for 7 consecutive years, liquidity is still ample.

At the beginning of the new year, the central bank's working conference put forward that the new credit target of this year will be lower than that of 7 trillion and 500 billion yuan last year. However, considering the need to maintain a relatively high growth rate, the money supply can not be reduced too much. Moreover, from the past experience of monetary policy implementation, the final amount of money will often exceed the original set target.

Therefore, the current ample liquidity environment is obviously not conducive to inflation governance.

Three, the influence of international factors

At present, there are many adverse factors in the world economy which affect the price trend of our country.

1.

Loose liquidity around the world.

Since the second half of 2008, most of the world's economies have implemented a moderately loose monetary policy in order to cope with the impact of this unprecedented international financial crisis.

As the economic recovery is relatively slow, the United States and other developed countries have adopted the quantitative easing policy for the second time.

As the saying goes, "there is no free lunch in the world", from the macroeconomic perspective, the result of adopting a strong policy to stimulate the economy is, on the one hand, shortening the time needed for economic recovery; on the other hand, it also makes inflation "concomitant".

Therefore, both developed and developing countries are suffering from inflation.

Quantitative easing has led to the current global inflation.

2. global food prices hit a 20 year high.

In recent years, prices of sugar, grain and oil crops soared, bringing food prices to a record high in December 2010, even exceeding the level of food crisis that caused the world's riots in 2008, reaching the highest level since 1990, and the international grain price index has risen for sixth consecutive months.

Abdul Reza Abba, chief economist of FAO, warned Xi'an that the world is facing "food price shocks".

In addition to grain, other commodities, including energy, metals and minerals, also rose sharply.

Since the beginning of February this year, the copper price in the international market has climbed and recorded many times.

The real price pressure is expected to show up in the coming months due to the rising price effect of raw materials and the time needed for the pmission along the supply chain.

Four.

The central economic work conference, held in December last year, set the tone for "strengthening and improving macroeconomic regulation and control and maintaining stable and healthy operation of the economy" in 2011.

There is no doubt that effective control of inflation has become the primary goal of the macroeconomic regulation and control policy in 2011.

To this end, monetary policy has shifted from moderate easing to stability.

So far, the people's Bank of China has raised the deposit reserve ratio for the 8 time and raised interest rates 3 times, all of which focus on price regulation.

After the CPI rose again in January, the urgency and necessity of implementing this policy became more prominent.

The central bank's immediate increase in the deposit reserve ratio after the launch of CPI in January fully illustrates this point. However, from the perspective of the past policy, there are still some unsatisfactory results.

On the one hand, the formulation and implementation of policies need to be improved. On the other hand, the effectiveness of policies is not everything.

Therefore, policymakers must understand that at least two factors restrict the effectiveness of macroeconomic regulation and control.

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External factors.

A variety of unforeseen external factors often affect the implementation of macroeconomic regulation and control.

These unknowable factors are magnified by the "Butterfly Effect" and will generally bring unpredictable effects to the economic operation.

In reality, the effectiveness of macroeconomic regulation is often "incompetent" compared with various market factors.

Because there are so many disturbing factors in the market that they can not be predicted.

For example, the prices of agricultural products such as soybeans and garlic in the past two years have been hyped up by unforeseen funds.

These disturbing factors may come from home or abroad, which can be either energy demand or supply side; it may arise from macro policy formulation or macro policy implementation.

- the limitations of the effectiveness of national policies.

Under the environment of open economy, the regulatory power of a country's government often appears to be very limited.

For this reason, governments need joint action, but such joint action is often difficult to carry out effectively.

Because this is a "non cooperative game", and the first thing that all governments consider is their own interests.

International joint control in countries when the pace of economic operation is relatively consistent, it is also good to say that once the economic operation of different countries is inconsistent, governments will adopt a "beggar thy neighbour" policy, just as this time to deal with the financial crisis, began to affect the economies of all countries, basically have adopted a loose monetary policy, and later to the United States and other developed countries, the pace of economic recovery is slower than China, when China's macroeconomic policy began to shrink, the United States is still implementing the second quantitative easing policy to stimulate the economy.

Therefore, self governance in action often leads to the failure of the joint regulation policy implementation.

As a result, the international differentiation policy has a reverse impact on the implementation of domestic macro policies.

Premier Wen Jiabao recently made a statement on the price issue for three consecutive times. He stressed that "we must resolutely prevent prices from rising too fast, and maintain the overall level of prices basically stable through developing production, ensuring supply, enlivening circulation and strengthening supervision."

It should be said that the current price trend can be expected, and the corresponding policy tools and implementation steps are also clear.

However, we need to learn from the experience of previous policy applications and strive for international policy coordination and cooperation so as to further improve the pertinence and effectiveness of policy formulation and implementation.

Under the effective role of the policy, the price trend in 2011 is expected to be "first high and then low".