By Wang Likun, Research Institute of Market Economy, DRC

Research Report, No.147, 2019 (Total 5647) 2019-8-26

Abstract: In the first half of 2019, food prices including that of fresh fruits and pork pushed up the consumer price index (CPI). In light of the current hog stock and replenishment, sow breeding and the growth period of piglets, it is predicted that the tightening pork supply and the climbing price will last to the first and second quarters of next year, exerting a certain upward pressure on prices. However, CPI is expected to remain stable in 2019, with a year-on-year growth of about 2.7% to 3.0%. The risk of stagflation in China’s economy is relatively low due to the low level of Core CPI YoY, much higher economic growth than price growth and prudent fiscal and monetary policies. In this regard, in the second half of the year, the policy of maintaining stable prices and steady growth could be advanced at the same pace. It is advisable to take targeted regulatory policies focusing on certain food prices. Macro policies could be made more flexible to strengthen counter-cyclical adjustments. Besides, social relief measures need to be taken to shore up stable market performance and the pricing reform in the public service sector needs to be deepened.

Key words: CPI, pork prices, stagflation risks, stabilize prices, smooth growth