National Business Daily:

We noted that the CPI reversed in August from a month-on-month decline of 0.1% in the previous month to a 0.4% increase, with the year-on-year increase rebounding to 0.8%. In addition, the core CPI rose by 1% year on year. What are the underlying factors behind this? How do you view the future trends? Thank you.

Fu Linghui:

I would like to invite Ms. Wang to answer your questions.

Wang Guanhua:

Consumer prices in August were characterized by three main features:

First, both the CPI and core CPI showed a moderate upward trend. In August, CPI increased 0.8% year on year, an increase of 0.3 percentage point from the previous month, mainly due to the impact of the widening increases in energy prices. In August, influenced by the geopolitical situation, international crude oil prices fluctuated at high levels, and domestic refined oil prices underwent two adjustments, first decreasing and then increasing, with the increase outweighing the decrease and exerting a notable upward pull on the CPI. Energy prices increased by 4.1% year on year, up from 0.6% last month, adding about 0.24 percentage point more to the upward pull to the CPI than the previous month. Among them, gasoline prices rose by 9.3%, 8.3 percentage points higher than the previous month. The core CPI, excluding food and energy, rose by 1.0%, up by 0.1 percentage point from the previous month, continuing the moderate upward trend since the beginning of the year.

Second, increased demand for certain industrial consumer goods and services led to a price rebound, with consumer electronics and travel services being notable examples. Artificial intelligence is driving rapid growth in demand for computing power and iterative upgrades of consumer electronics. In August, the prices of tablets, computers and cellphones rose by 21.5%, 19.6% and 11.0% year on year, respectively, with the growth rates all widening from the previous month. Summer cultural and tourism consumption demand was robust, with travel service prices rising by 1.3% year on year, an increase of 1.2 percentage points wider than the previous month. Specifically, travel agency fees and transportation vehicle rental prices rose by 2.4% and 2.2%, respectively.

Third, prices of essential consumer goods remained stable with a slight decrease. In response to the adverse effects of extreme weather such as high temperatures, typhoons and heavy rainfall, relevant authorities actively implemented policies and measures to ensure supply and stabilize prices, and strengthened coordination across production, transportation and sales. The supply of grain and vegetable products was generally sufficient, and prices continued to fluctuate slightly. Food prices fell 1.4% year on year in August. Specifically, the decline in pork prices narrowed from the previous month, while the prices of eggs, mutton and beef rose. Prices of fresh vegetables, fruits, cooking oil and grains fell slightly.

Overall, the moderate CPI rebound in August was driven both by rising international energy prices and by the expansion and improvement of domestic consumer spending. Looking at recent price trends, as the weather cools and holidays such as the Mid-Autumn Festival and National Day approach, food demand will pick up, and the demand for service consumption such as holiday travel, dining out and tourism is expected to surge. The iterative upgrading of new technologies and products and the continuous cultivation of new areas of consumption growth new consumption growth points will all help support a moderate increase in CPI. Thank you.