By Wang Wei & Wang Likun, Institute of Market Economy, DRC

Research Report, No.193, 2018 (Total 5468) 2018-11-15

Abstract: In the first three quarters of 2018, China’s consumer price level remained stable across the board. CPI showed a U-shaped performance trend year on year with a fluctuation of round about 2%. Among various items, food, housing and medical care are the main factors contributing to the rise of CPI. It is estimated that the prevention and control of African swine plague, the development of the housing rental market, the progress in advancing consumption policy and the implementation of new personal income tax in 2019 will form a certain support for stabilizing CPI growth, while the impact of Sino-US trade frictions on China’s CPI performance is limited and quite indirect. In addition, it is expected that structural changes in consumption will gradually enhance the impact of service prices on CPI. In view of various factors, it is predicted that CPI will show a high-to-low year-on-year growth trend in 2019. The annual inflation level will be about 2.2%. Based on the current economic operation and price performance, it is suggested that efforts should be made to maintain price stability in 2019, adjust the approach on price regulation and control, promote price reform in relevant fields based on relevant research findings, and provide a relaxed price operating environment for monetary policy and economic development.

Key words: CPI performance analysis, prospect, policy options