Phoenix TV:

In August, the year-on-year CPI increase expanded, reaching its highest level in the past six months. What are the underlying factors behind this? What is your outlook for future trends? Thank you.

Liu Aihua:

Influenced by factors such as high temperatures and heavy rainfall, the national CPI showed a seasonal month-on-month increase in August, and its year-on-year growth was larger than that of the previous month.

First, looking at the month-on-month change, the CPI increased by 0.4%, a decrease of 0.1 percentage point compared to the previous month. Specifically, food prices increased by 3.4%, contributing approximately 0.6 percentage point to the month-on-month increase in the CPI. Non-food prices decreased by 0.3%, contributing approximately 0.24 percentage point to the month-on-month decrease in the CPI. In the food category, mainly influenced by high summer temperatures and localized heavy rainfalls, the prices of fresh vegetables, fresh mushrooms, fresh fruits and eggs increased, collectively contributing 0.49 percentage point to the month-on-month increase in the CPI. Pork prices increased by 7.3%, contributing 0.1 percentage point to the month-on-month increase in the CPI. In the non-food category, mainly influenced by fluctuations in international oil prices, domestic gasoline prices decreased by 3%. With the school season coming, due to a decline in demand for travel, airplane ticket prices and travel prices decreased by 5.1% and 0.7%, respectively.

Looking at the year-on-year change, the CPI increased by 0.6%, an increase of 0.1 percentage point compared to the previous month. Food prices, which saw a flat rate in the previous month, rose by 2.8%, contributing approximately 0.51 percentage point to the year-on-year increase in the CPI. Non-food prices increased by 0.2%, contributing approximately 0.13 percentage point to the year-on-year increase in the CPI. In the food category, the prices of fresh vegetables, fresh fruits and pork increased by 21.8%, 4.1% and 16.1%, respectively, while the prices of eggs, edible oils, beef, mutton and tubers decreased within a range of 4% to 14.5%. In the non-food category, service prices rose by 0.5%, a decline of 0.1 percentage point. Specifically, medical service prices increased by 1.9%, education service prices increased by 1.7% and family service prices increased by 1.6%. At the same time, airplane ticket prices decreased by 11.9% and hotel accommodation prices decreased by 3.6%. In the non-food category, the prices of industrial consumer goods decreased by 0.4%, among which gasoline prices decreased by 2.7%, the prices of fuel-powered compact cars decreased by 6.4%, and the prices of daily household necessities, indoor decorations and traditional Chinese medicines increased within a range of 1.1% to 6.9%. These are the main reasons for the month-on-month and year-on-year changes of the CPI in August.

Looking ahead, with cooler temperatures and the end of China's major flood season, reduced rainfall will provide favorable conditions for vegetable cultivation, transportation and storage. Moreover, considering increased consumer demand during the Mid-Autumn Festival and National Day holidays, overall vegetable prices might experience a modest decrease. Given the reduced hog production and the impending traditional peak season for consumption, pork prices are likely to increase further. Overall, food prices are expected to remain stable. Regarding industrial consumer goods, energy prices are facing increasing downward pressure due to international factors. Meanwhile, the supply of other industrial consumer goods is ample, therefore, their prices are expected to remain stable. Service prices are expected to experience a slight increase due to the impact of the Mid-Autumn Festival and National Day holidays. Given all the factors mentioned above, the CPI is expected to gradually increase in the coming period.