N Videos at Southern Metropolis Daily:

We have noticed that the year-on-year increase in the CPI in October fell slightly compared to the previous month. What are the reasons behind this? How do you view the current price level? And what is your prediction for future development? Thank you.

Fu Linghui:

Thank you for your questions. Impacted by fluctuations in food and energy prices, the CPI experienced a slight year-on-year and month-on-month decrease in October. Though, this monthly change is normal.

In terms of monthly changes, the October CPI was down by 0.3%, same as the previous month. Food prices had the biggest impact. The monthly decrease in food prices was 1.2% and this was the main factor causing the monthly decrease of the CPI. Prices for pork, fresh vegetables, fresh fruit and aquatic products saw monthly decreases ranging from 1% to 3.7%, accounting for 0.2 percentage point or around 70% of the overall CPI decrease. This was mainly because the prices for certain types of fresh food went up due to extreme weather in September, with the prices then falling in October as the impact of extreme weather disappeared.

In terms of year-on-year changes, the October CPI rose by 0.3% over the same period and was 0.1 percentage point lower than the previous month. The slower year-on-year growth is mainly attributed to the fall in food and energy prices. In October, food prices rose by 2.9% year on year, 0.4 percentage point lower than the previous month, accounting for 0.1 percentage point of a narrow CPI increase. Among all food categories, prices for fresh vegetables, fresh fruit and pork saw their year-on-year increases fall in comparison to the previous month. In October, the decrease in energy prices expanded by 1.6 percentage points in comparison to the previous month, which also contributed to the lowered increase of CPI.

Excluding food and energy, prices for most products and services remained stable or slightly improved. The core CPI rose by 0.2% year on year in October, 0.1 percentage point higher than the previous month, showing a slight recovery. Service prices rose by 0.4% year on year in October, 0.2 percentage point higher than the previous month. The rental of vehicles rose by 3.2%, presenting a small increase which was driven by holiday consumption booms during the month.

Overall, consumer prices remained relatively stable in October, with prices in some sectors exhibiting small increases that were driven by boosts in demand. In the next phase, China is expected to have a bumper harvest, and the supply of live pigs and fresh vegetables is expected to be stable. As winter and New Year's Day approach, food prices will likely stabilize at a slightly higher level. In terms of industrial consumables, energy prices could be impacted by import prices, although most products will be able to maintain sufficient supply and stable prices. Supply of services will be generally stable. As the economy improves, it will drive increased demand for services, thus drive up service prices. Considering all these factors, the CPI will maintain a trend of mild increases in the future.

Thank you.