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China’s CPI growth to slow down markedly in 2012 (2)

(People's Daily Overseas Edition)

16:54, January 16, 2012

CPI may touch the bottom first and then rise slowly in 2012

Regarding the commodity price trend of 2012, the market is very optimistic. The chief economist of the Industrial Bank Corporation Lu Zhengwei predicts that the CPI of January may be equal to that of December of 2011, but will rapidly decline after February and reach the bottom in the middle of 2012. The CPI will touch the bottom and then rise slowly in 2012.

Lian believes that the growth rate of China's commodity price will decrease significantly in 2012 compared to that of 2011 because of four reasons:

First, the declining trend of the international bulk commodity price probably will continue.

Second, the macroeconomic control measures adopted by the Chinese government in the past will take effects gradually.

Third, the possibility that the agricultural product price will level off and slowly go down is high.

Fourth, the CPI carryover effect of 2012 will be 1.4 percentage points less than that of 2011.

Monetary policy may be relaxed properly

Lian predicts that the overall keynote of the monetary policy of 2011 was “being steady,” but the actual operation of the policy experienced three periods of being a little tighter, being prudently balanced and carrying out timely fine adjustments.

The Central Economic Work Conference has clearly prescribed that China will continue to implement a steady monetary policy. Generally, the monetary policy of 2012 will be looser than that of 2011 and will have three obvious features of the flexibility, foreseeability and pertinence.

【1】 【2】

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