CPI Is Hard To Surpass 4%&Nbsp In March; Monetary Policy Easing Is Expected To Increase.

Next Monday (April 9th), the National Bureau of statistics will publish CPI data of China in March. According to a number of agencies, the price situation in March was better judged. The CPI estimate in that month is slightly higher than that in February, but it will remain low.

In the past two months, the profits of industrial enterprises have declined, and the consumption of electricity has shrunk dramatically. Some signs of China's economic downturn are being increasingly concerned by policymakers. Premier Wen Jiabao at the beginning of this month in Guangxi and Fujian, he also pointed out that according to the change of the situation, we should introduce the fine tuning measures as soon as possible, and make policy preparations at the same time, leaving corresponding policy space.

Li Xunlei, a deputy to the Shanghai Municipal People's Congress and a famous economist, said that China should cut it down in the two quarter. Deposit reserve ratio To ensure the money needed for the development of the real economy, inflation will remain low in the two quarter.

Core CPI will remain at a low level.

Since 2012, the trend of inflation has obviously declined. Although CPI exceeded expectations in January to 4%, it fell to 3.2% in February. Li Xunlei judged that in March, due to the rise in vegetable prices, it might slightly increase CPI to 3.5%, but not more than 4%.

The monitoring system of the prices of agricultural and sideline products and agricultural products showed that the price of vegetables in the whole country is still decreasing but the overall price is still high. As of March 31st, over 70% vegetable prices were higher than the same period last year. Scallion, cabbage and Chinese cabbage increased year by year, which were 85.8%, 63.6% and 54.9% respectively. The other varieties rose more than 30%~50% year-on-year.

The average price change of the main food in 50 cities published by the National Bureau of statistics also showed that in late March and mid March, the price of Chinese Cabbage Rose obviously, up to 9.2%, and the rest had fallen. However, compared with the late February, 5 of the 7 vegetables rose.

Compared with the price of vegetables, pork prices fell for 9 weeks in a row. The inhibition effect on CPI was more obvious. According to the latest data of the Ministry of Commerce, the price of pork decreased by 1.7% last week, down 11.5% from the end of January. Zhang Xiaoqiang, deputy director of the national development and Reform Commission, said recently that CPI was about 3.5% in the first quarter.

Everbright Securities [12.48 -1.11% shares bar Research Report] Chief macroeconomic analysis Shi Xugao said that taking into account the recent toughness of food prices, as well as the "tail" factor of a slight increase, the forecast CPI year-on-year figures in 3 and April will be similar to 3.2% in February, CPI will enter the "platform period". He explained that the tail factor and the toughness shown by recent food prices are the key reasons for CPI to move out of the "platform period" in the next few months. The 3~5 month's "tail up" factor is 1.9%~2.0%, which will bring great stickiness to CPI's year-on-year figures.

Li Xunlei believes that the two quarter inflation pressure is still small, the tail factor remains relatively low, the global economy is still at a low growth stage, import inflation pressure is difficult to rise, CPI, especially the core CPI will remain at a low level.

Monetary policy easing is expected to strengthen

Before and after CPI data release, the central bank often uses the monetary policy tools such as deposit reserve ratio or interest rate to carry out macro-control sensitive period. In this regard, Li Xunlei believes that CPI is relatively low at present, will not affect the deposit rate reduction, market liquidity has been in a tight state, if we want to boost the economy, we need to adjust the deposit rate.

Wang Tao, chief economist at UBS, said that as the deposit rebounded at the end of the quarter, M2 growth would also pick up. As the loans began to pick up, foreign exchange inflows remained weak, and the central bank needed to reduce the deposit rate again in April or May.

　 Economic downturn It is the main reason why policy faces tend to stimulate growth. Li Xunlei said that China's economy is still in the bottom up process, this year's GDP growth trend may show "shallow U", the two or three quarter economic growth may be weaker than the first quarter. "It is hard to see a strong rebound this year, as in 2009, because there is no 4 trillion stimulus plan for that scale."

"Whether it is the international economic environment or domestic demand changes, it is necessary to ease demand through easing monetary policy." China international economic exchange center expert Zhang Yongjun also holds the same view.

Compared with the past, policy fine-tuning may not only be reflected in monetary policy. In the two quarter, the Chinese government may use financial, monetary and industrial policies to stimulate the economy.

"One of the key points in presetting fine-tuning is to ensure funding for ongoing construction projects." Wen Jiabao also stressed in the investigation that we should maintain a moderate scale of investment and promote the implementation of the major projects in 12th Five-Year as scheduled, and launch a number of major projects that are related to the overall situation and lead to a strong role as soon as possible.