During the Mid-Autumn Festival, food and wine are indispensable for family reunion, but food prices are rising all the way. On September 10, the National Bureau of Statistics released the August CPI (Consumer Price Index). Year-on-year, CPI rose by 2.8%, the same as last month, w

Mid-Autumn Festival, when family reunites, food and wine are indispensable to bring fun, but food prices are rising all the way.

Unlike other types of consumer goods, food is a necessity for daily life, especially meat and fresh fruits have risen sharply in the past six months. Will the continued rise in food prices have a "crowding out effect" on other types of consumer goods? In addition, inflation levels will also have an impact on the central bank's monetary policy. Will the rise in CPI become a constraint on monetary policy relaxation? Let’s discuss it together today.

pork rose 46.7% year-on-year. Can the meat price be stabilized in the "double festival"?

Chart source: National Bureau of Statistics

Recently, the "second senior brother"'s "appearance rate" has been very high, and it has brought a lot of panic to people every time. Data from the National Bureau of Statistics shows that in the CPI food category, pork prices rose 46.7% year-on-year, an increase of 19.7 percentage points from the previous month. Data from the Ministry of Commerce shows that the average wholesale price of pork from August 26 to September 1 reached 34.59 yuan per kilogram. Affected by this, the prices of beef, mutton and chicken in the meat family also rose, with an increase of between 11.6% and 12.5%.

Why do people pay so much attention to pork prices from the country to the people?

This has a lot to do with the eating habits of Chinese people. Pork is the most important meat food for Chinese people. Data shows that in 2017, the total global pork consumption was 110.588 million tons, while in China it was 54.935 million tons. Chinese eat half of the world's pork.

Mid-Autumn Festival and National Day "Double Festivals" are coming soon, and people's demand for meat products will see a small peak. In order to accelerate the supply of pork and return to stability, since September, many ministries and commissions have issued documents to subsidize or encourage pig farming, including the National Development and Reform Commission, the Ministry of Agriculture and Rural Affairs, the China Banking and Insurance Regulatory Commission, the Ministry of Ecology and Environment, the Ministry of Natural Resources, the Ministry of Transport, etc. There are also many measures in

. Nanning, Guangxi will implement temporary intervention measures for pork prices starting from September 1, and set up limited-price sales of pork in major farmers' markets. Recently, Guangdong said that more than 3,000 tons of provincial frozen pork reserves will be put on the market during the Mid-Autumn Festival and National Day.

However, increasing the supply of live pigs is not a day. In the view of industry insiders, this kind of policy intensity is relatively rare, and the market regulation effect may appear by the end of 2020. In other words, pork prices may continue to rise in the short term. Friends who love meat can stock up on the meat before the festival.

is more expensive to eat, has consumption "shrunk"?

As the highlight of Chinese dining tables, rising pork prices will inevitably increase people's catering expenditures, but at present, people's living burden has not increased significantly. The aunts who often go shopping in the vegetable market complain, they still have to buy it. Young white-collar workers are used to dining out, and even if the amount of pork dishes has decreased, it does not prevent them from continuing to enjoy the delicious food.

Meituan recently released the "2019 Mid-Autumn Festival Holiday Consumption Trend Forecast Report" (hereinafter referred to as the "Report") showing that during the Mid-Autumn Festival, the order volume of online meal reservations for Meituan is 240% of the weekdays. The proportion of orders for dining with more than five people is higher than usual, among which the proportion of orders for dining with more than eight people increases by 40%. From a regional perspective, the faster the city is, the more keen consumers are in the process of booking seats online.

Finally, as the living standards of our residents continue to improve, the proportion of people's expenditure on food accounts for a lower and lower proportion of all expenditures. Compared with housing prices and rent expenditures, changes in food expenditures for three meals a day have not had a big psychological impact on people.

From August, food prices have not all risen. As the interference of extreme weather weakens, the prices of fresh fruits and fresh vegetables have fallen and prices have dropped. In addition, the stability and decline in consumer prices of commodities such as clothing, residence, daily necessities and services, transportation and communications will also help residents better control their expenditures.

Chart source: National Bureau of Statistics

Is there still room for monetary policy to continue to be loose?

In addition to reflecting our living costs, CPI is also a very important macroeconomic indicator. The trend of monetary policy is closely related to it. Usually, the economy is growing rapidly and inflation is on the rise. Monetary policy should inevitably be tightened to avoid flooding and causing comprehensive and significant price increases.

But at present, the Chinese economy is facing a situation where economic growth momentum is slowing down and inflation continues to rise. Among them, inflation is rising, especially affected by the rise in prices of some foods such as pork. In this atypical inflation rising, the market has attracted great attention from the market.

Last Friday, the central bank just announced a reduction in the reserve requirement ratio. Starting from September 16, it will comprehensively lower the reserve requirement ratio of financial institutions by 0.5 percentage points, and newly issued 900 billion yuan. Whether the continued rise in CPI will restrain the central bank's future monetary policy, there are obvious differences in views among various financial institutions.

CICC believes that this round of food price inflation, mainly driven by supply factors, is difficult to change the overall path of monetary policy. With the transformation and structural adjustment of China's economy, food's share of total consumer spending continues to decline, and the central bank and the market may view core CPI and PPI as more effective indicators of general inflation and nominal return on investment.

But the agency also pointed out that the overall CPI past "3" may still have some subtle impact on the timing and form of monetary policy adjustment. Deng Haiqing, president and chief economist of Wall Street Journal Research Institute, wrote an article pointing out that based on high-frequency data, the CPI in September is likely to reach 3%. If CPI can reach 3% starting in September 2019, the possibility of a central bank cutting interest rates is basically eliminated.

Monetary policy is related to our investment returns, and friends should pay close attention to the changes in this area. Once monetary policy is loose again, our investment strategy needs to be changed accordingly. It is recommended that financial novices do not blindly follow the trend, focus on diversified investment and portfolio investment, and do not put eggs in the same basket to diversify risks and obtain average returns.