Prices Are Rising Moderately, And Monetary Regulation Is Flexible.

Data released by the National Bureau of statistics on 11 may show that in March 2019, the national consumer price (CPI) rose by 2.3% over the same period, and returned to the "2 era" after a lapse of three months.

Experts believe that the rise in pork prices has increased the CPI year-on-year increase, and the price increases remain moderate, which will not be a major constraint on monetary regulation.

Pork prices rise

Dong Yaxiu, director of the city Bureau of the National Bureau of statistics, said that CPI rose 2.3% in March, an increase of 0.8 percentage points from last month.

Among them, food prices rose 4.1%, affecting CPI rose by about 0.82 percentage points, non food prices rose 1.8%, affecting CPI rose by 1.46 percentage points.

It is estimated that in the 2.3% year-on-year increase in March, the impact of the price change last year was about 1.1 percentage points, and the impact of the new price increase was about 1.2 percentage points.

CITIC Securities fixed income chief researcher Ming Ming said that most of the decline in food prices caused by the March food ring ratio by the rise and fall, pork prices continue to rise sharply and vegetable prices slow down is a positive impetus to the March food year-on-year upward trend of the core power.

In Ming Ming's view, the pig farms in March continued to decrease, and farmers' willingness to make up the fence declined further. Supply contraction led to a rapid rise in pork prices.

Lian Ping, chief economist at Bank of communications, thinks that the rise of the tail factor is the main reason for the CPI's year-on-year expansion.

CPI increased by 0.8 percentage points over the same period. The main reason is that the tail factor has increased by 1.1 percentage points, while the CPI ring ratio is negative. The new price increase factor is weak.

In terms of PPI, data show that PPI rose 0.4% in March, up 0.1% over the same period.

Lian Ping said that PPI has picked up for the first time since June last year, and the risk of deflation in the industrial sector has weakened.

The main reason for the PPI bottoming out is that the price of producer goods is rising. PPI is expected to continue to rise slightly in the two quarter.

Prices will not be the main factor restricting monetary regulation.

"Pork prices fell for the first time in 25 months, and there may be a marked upward trend in the future. We need to focus on the impact of pig cycle."

Looking forward to the future, Lian Ping said that the number of pig farms and the number of sow stocks could drop to a recent low level, and the price of pork in the future may still have a distinct upward trend.

Affected by the tail factor and pig cycle, the CPI growth in the two quarter may still rise.

Lu Zheng commissar, chief economist of Societe Generale, said that pig production in scale farming enterprises continued to increase in the first quarter of this year, reflecting that the supply of raw pigs was not so scarce. Therefore, the possibility of CPI breaking 3 is unlikely.

"Overall price inflation is moderate and there is no high inflation pressure, which will not bring restrictions on macro policy control."

Lian Ping said that the demand for core inflation increased significantly during the year.

In the future, monetary regulation should take the core CPI as the basis of policy decision after excluding food and energy prices. At present, the core CPI trend is stable, and inflation should not be the main factor restricting the operation of monetary regulation.