Distorted CPI

Guoju the year-on-year increase in CPI has long been seen as an important basis for judging the severity of inflation, but this year it is less sensible to judge inflation by this measure alone. As the financial crisis led to a sustained negative CPI growth last year, the tail-end factor contributed significantly to the CPI rise this year.　　Since the beginning of the year CPI continued to rise mainly by the impact of the tail factor, the new price factors contribute to the fact is not big. According to the Bank of Communications Finance Research Center, 2010 CPI Warping Factor presents "inverted U" shape trend, 6 July rose to the annual high, to 2.1%.　　Therefore, the tail factor will pull the first half of the CPI continued to rebound, the end of the two quarter may reach the full year high, but, in the second half, with the tail-end factors fall, CPI is expected to lower.　　They believe that, in the absence of other sudden factors and in the timely regulation of policies, the annual CPI Year-on-year increase in 2010 may be between 3%~4%, PPI year-on-year increase will fall between 5.5%~6%, which, the impact of the tail factor on the PPI in about 3%. Citic Investment securities macroeconomic analyst Hu Yanni also believes that, affected by the warping factor, this year's CPI growth will appear in 6 July, if not the extreme weather and other uncontrollable factors, the annual inflation rate of about 3.5%. Graphics/Zhang Yijun