ThePaper.cn:

Currently, China's PPI has experienced six consecutive months of negative year-on-year growth. How does the NBS view this trend of PPI? Thank you.

Fu Linghui:

There is much concern over PPI. While CPI's year-on-year increase has slowed this year, PPI's decrease has expanded. In the first quarter, PPI fell by 1.6% year on year, with a 2.3% decrease in production material prices being the main factor for the decline. The expansion of the year-on-year decline in PPI is due to two main factors. Firstly, it is influenced by imported factors from the international environment. Since the beginning of this year, the growth of the global economy has slowed down, market demand has weakened, supply bottlenecks have eased, and the prices of bulk commodities have fallen, leading to a decrease in the prices of related products in domestic industries such as petroleum and nonferrous metals. In the first quarter, prices in the nonferrous metal industry fell by 5.9% year on year, while prices in the petroleum and natural gas extraction industry fell by 5.3%. Secondly, the high base figure from the same period last year is also a factor. The international bulk commodity prices rose sharply last year, affected by geopolitical conflicts and the COVID-19 pandemic, and the domestic supply was tight due to the pandemic, which led to a year-on-year increase of 8.7% in PPI in the first quarter of last year. The relatively high base figure also affects PPI trends this year.

From the perspective of month-on-month changes, PPI has been relatively stable this year. In January, PPI fell by 0.4% compared to the previous month, while in February and March, it remained stable. The main factors are, on the one hand, the recovery of domestic market demand, which has led to a month-on-month increase in the prices of investment goods such as steel and cement. In March, the prices of steel and cement both increased by 1.3% compared to the previous month. On the other hand, prices in the petroleum extraction and nonferrous metal industries decreased by 0.9% and 0.3% month on month, respectively, under the influence of imported factors from the international market. Meanwhile, due to seasonal factors, the demand for coal has decreased, and the prices in coal mining and washing industries fell by 1.2% month on month. Under the combined influence of these factors, PPI has remained stable month on month.

Going forward, overall domestic demand is starting to rebound, which has a certain upward effect on PPI. However, the transmission of international commodity prices still exists and coupled with the high base figure from the same period last year, PPI may remain in a downward range in the short term. Nevertheless, as the domestic economy recovers and the base effect gradually diminishes, PPI will gradually return to a reasonable level. Thank you.