According to the data released by the National Bureau of Statistics on January 11th, in 2020, the national consumer price (CPI) rose by 2.5% compared with the previous year, and the year-on-year increase remained in the "2 range" for the third consecutive year, successfully completing the goal of "about 3.5%" proposed in the 2020 Government Work Report. In 2020, the ex-factory price (PPI) of industrial producers decreased by 1.8% compared with the previous year; In the month of December, CPI rose by 0.2% year-on-year and 0.7% quarter-on-quarter; PPI decreased by 0.4% year-on-year and increased by 1.1% quarter-on-quarter.

Price operation is "high before and low after"

Dong Lijuan, senior statistician of the Urban Department of the National Bureau of Statistics, said that in December 2020, all regions and departments consolidated and expanded the achievements of epidemic prevention and control and economic and social development, and the consumer demand of residents continued to grow. At the same time, due to special weather and rising costs, the CPI turned from falling to rising.

From a year-on-year perspective, the CPI in December 2020 changed from 0.5% in November to 0.2%. Among them, the food price changed from 2.0% in November to 1.2%, which affected the CPI increase by about 0.26 percentage points. The core CPI excluding food and energy prices rose by 0.4% year-on-year, and the growth rate dropped by 0.1 percentage point from November. From the ring comparison, CPI changed from 0.6% in November to 0.7%. Among them, the food price changed from 2.4% in November to 2.8%, which affected the CPI increase by about 0.62 percentage points.

Guo Liyan, director of the Institute of Market and Price of China Macroeconomic Research Institute, believes that the main feature of CPI operation in December 2020 is that the prices of food and energy have turned from falling to rising, contributing about 85% and 15% to the increase of CPI respectively. Among them, due to the extreme cold weather, the production and transportation in some areas are slightly blocked, and the market supply is tight. In addition, the price of pork, fresh vegetables, eggs and other foods has increased from the previous month, which is the main factor to promote the CPI recovery; Affected by the rise in international crude oil prices, gasoline and diesel prices rose slightly month-on-month, which also supported the CPI recovery to some extent. The month-on-month and year-on-year increase of core CPI excluding food and energy are basically the same as those in November 2020, indicating that the current economic operation is basically stable, the supply and demand are dynamically matched, and the stability of CPI operation is further enhanced.

"In 2020, the CPI operation showed an obvious trend of’ before high and then low’, rising by 2.5% for the whole year, maintaining a reasonable operation range, and successfully achieving the annual price control target." Guo Liyan analyzed that after the outbreak of COVID-19, according to the decision-making arrangements of the CPC Central Committee and the State Council, the relevant departments fully implemented the work of ensuring supply and stabilizing prices of key commodities for people’s livelihood, strengthened the foundation of "vegetable baskets" and "rice bags" in various places, intensified efforts to restore production and supply, and accurately put in place measures such as emergency support, reserve adjustment and import adjustment. Since the second quarter, CPI has shown a steady downward trend. Although the prices of individual commodities fluctuated in the third and fourth quarters due to seasonality, extreme weather and sporadic epidemics, the overall trend continued to decline steadily, and the annual trend was in line with expectations.

The price of industrial products continues to rise.

"In December 2020, domestic demand recovered steadily, and the prices of some international commodities continued to rise, driving the prices of industrial products to continue to rise." Dong Lijuan said.

From a year-on-year perspective, the PPI decreased by 0.4%, which was 1.1 percentage points narrower than that in November 2020. Among them, the price of means of production decreased by 0.5%, and the decline narrowed by 1.3 percentage points; The price of means of subsistence fell by 0.4%, and the decline narrowed by 0.4 percentage points.

From the ring comparison, PPI rose by 1.1%, an increase of 0.6 percentage points over the previous month. Among them, the price of means of production rose by 1.4%, an increase of 0.7 percentage points; The price of means of subsistence rose by 0.1%, the same as in November 2020. Among the major industries, affected by the international crude oil price increase and other factors, the price of oil and natural gas mining industry rose by 7.9%, the price of oil, coal and other fuel processing industry rose by 5.3%, and the price of chemical raw materials and chemical products manufacturing industry rose by 2.3%, all of which expanded, which affected the PPI to rise by about 0.37 percentage points. As the domestic market demand continues to pick up, and the prices of international commodities such as iron ore and non-ferrous metals rise more, the prices of metal-related industries continue to rise. As the temperature at the end of the year was lower than normal, the demand for heating increased rapidly, which led to the increase of gas production and supply, coal mining and washing industry by 1.3 percentage points.

Guo Liyan believes that due to the rising prices of international crude oil, iron ore, non-ferrous metals and other bulk industrial raw materials, the prices of "three blacks and one color" industries such as domestic petroleum and petrochemical related industries, ferrous and non-ferrous metal smelting and pressure processing industries have risen to varying degrees, thus supporting the PPI. The year-on-year decline has accelerated and narrowed, and it has fluctuated slightly around zero.

From the situation of the whole year, "with the acceleration of the resumption of work and production in major domestic industries, the circulation blocking points were opened in time, the supply and demand cycle and the market cycle were unblocked, and the upstream raw material prices gradually stopped falling and rebounded, returning to a reasonable fluctuation range, thus supporting the continuous narrowing of PPI year-on-year decline." Guo Liyan said.

Prices will be moderate in 2021.

Many interviewed experts believe that in 2021, CPI will show a trend of "first suppression and then promotion" and run within a reasonable range; The year-on-year increase of PPI is expected to turn from negative to positive, achieving a slight increase.

Guo Liyan believes that in early 2021, due to the high base, large negative hikes and the wrong month of the Spring Festival, the year-on-year increase of CPI may be at a low level and will remain in a reasonable operating range throughout the year. The decline of PPI will continue to narrow with the rebound of commodity price fluctuations, and it may turn from negative to positive in the first half of the year, and it is expected to increase slightly throughout the year.

Zhou Maohua, an analyst in the financial market department of China Everbright Bank, believes that CPI will show a steady upward trend in 2021. Affected by the high base in the next few months, the year-on-year increase of CPI may be in the contraction area, but then it will gradually pick up, and the price performance will be moderate throughout the year. Due to the good situation of domestic epidemic prevention and control and the continuous release of the effect of expanding domestic demand policy, China’s domestic demand will gradually return to normal level in 2021. The gradual spread of global vaccination and the introduction of unprecedented demand support policies by major economies will drive the price centers of energy and other commodities to a slightly higher level, and the prices of domestic industrial products will also gradually improve.

"Affected by the hikes and the overall weak demand, the year-on-year increase of CPI in the first quarter of 2021 may be negative. With the gradual recovery of demand, the year-on-year increase of CPI is expected to gradually return to positive after the second quarter, and inflation is expected to be moderate throughout the year. " Liu Xuezhi, a senior researcher at the Financial Research Center of Bank of Communications, believes that with the continuous acceleration of industrial production, PPI is expected to continue its upward trend, and positive growth is expected in the first quarter of 2021. (Reporter Xiong Li)