Price continues to double lower PPI rally may exacerbate inflationary expectations

China's consumer Price Index (CPI) fell 1.4% Year-on-year and fell by 0.3% in May, according to data released by the National Bureau of Statistics 10th. Compared with April, CPI declined 0.1% Year-on-year, and the chain decline widened by 0.1%.　　May Industrial Products ex-factory price (PPI) fell 7.2%, the chain Rose 0.1%, of which, raw materials, fuel, power purchase prices fell 10.4% Year-on-year, the decline was increased by 0.6 and 0.8% respectively in April. Analysts believe that the May CPI and PPI year-on-year data reflect the current macro-economy in China is still in a relatively difficult period.　　And PPI in the last two months of the chain growth, as well as food prices in the May quarter-on-quarter small increase, it is worth attention. The second half of the year or double is growing JPMorgan's managing director, Ms Ulrich, said the CPI and PPI could turn positive in the second half. The base was high last year, with pork prices rising, and the February CPI even reached 8.6%.　　Since last year, pork prices began to fall in the second half of the year, so the year-on-year decline will shrink school on the other hand, last year to the beginning of this year, the slowdown in economic growth led to lower demand, and the second half of the economy is expected to accelerate the upturn will also have a positive impact on prices, In fact, China's imports of commodities have been strong in the past few months, with 1-April copper imports doubling and the April aluminium imports quadruple. Oil imports in December, although a slight decline, but April crude oil imports increased by 13.6%. "While China's domestic demand has recovered, there is a hoarding mentality among traders and companies in anticipation of a rally in commodities over the next few months."　　"Ms Ulrich said. Ms Ulrich said that given the current rise in global commodity prices, the second half of the year to achieve industrial products ex-factory price increase is also possible.　　International oil prices are currently about 67 U.S. dollars/barrel, the minimum value of the increase of one times, copper price from 3000 yuan/ton to 5000 yuan/ton, also close to one times. The National Bureau of Statistics points out that in January-May, grain prices rose 0.2%, 1%, 1.5%, 0.4% and 0.8% respectively, and have risen for five consecutive months. Food is the raw material of many foods, and it also has a relationship with many agricultural products.　　Therefore, the rise of grain price trend, whether will affect the future trend of CPI, still need further observation.　　China's CPI is expected to reach its bottom in July and PPI will be bottoming out in July, Gao Yi, a senior analyst at the Eastern securities macroeconomic. Inflation risk is likely to increase "the current risk of inflation is increasing, on the one hand, countries to stimulate the economy to adopt a positive policy, including a large number of currency issuance, liquidity is likely to cause a rebound in prices." In addition, inflationary expectations are intensifying, which could lead to higher prices as some manufacturers hoard raw materials in anticipation of price increases.　"Zhang Yongjun, a researcher at the Ministry of Economic forecasting at the National Information Center, told reporters.　In fact, as far as China is concerned, in the first 4 months of this year, with the help of moderately loose monetary policy, the new credit of RMB 5.17 trillion yuan, more than the whole year of new credit, and ahead of the year to achieve the new loans more than 5 trillion yuan target. Gao Yi said that at present, China's prices are in a delicate balance, the risk of deflation is still in the process of withdrawal, inflationary pressure has emerged.　　But he also points out that, while there are worries about inflation, but whether inflation will emerge and what level it will develop depends on the game of two constraints: on the one hand, a large number of additional currencies has become the main driving force for inflation, and on the other hand, the current global overcapacity is still very serious, forming a downward repression of prices. "In spite of the economic recovery, demand has rebounded, but it has not reached the level of potential capacity."　　Gao Yi to reporters. Monetary policy should be "guaranteed growth" as the inflation risk is further aggravated, should monetary policy still maintain ample liquidity?　　Gao Yi to reporters that at present China's economy, although there are positive signs, but the stability of the foundation is still not strong, so the current macro-control policy will continue to be dominated by the growth, and will become the 2-3-quarter macro-control focus. But he also points out that, given the impact of inflation risks, if monetary policy is adjusted, it should be in the four quarter. Dongxiangan, chief macro analyst at Southwest Securities, also said monetary policy was expected to be fine-tuned in the four quarter of this year.