The latest data shows that in November, China's CPI increased by 0 year-on-year5%, which is the second consecutive month of negative growth, and the largest decline in recent years. Since the beginning of this year, there have been three months of negative data, with **03%, 02%, and the decline in November widened to 05%。Such a data release came as a surprise, given that moderate inflation is very beneficial to economic growth from the perspective of traditional economics. However, in the current situation, the inflation rate continues to fall, which raises concerns and reflections.
However, what is even more puzzling is that although the monetary aggregate has increased by 22 trillion in just 10 months, there has been no inflation, on the contrary, there has been a negative growth in prices. At the end of last year, the total amount of M2 currency in our country was 2664 trillion yuan, and at the end of October this year, the total amount of money has increased to 2882 trillion yuan. According to common sense, over-issuance of money tends to stimulate inflation, but it has not appeared as we expected. This has raised concerns about inflation risks and has also made people more confused and confused.
While the inflation rate continues to decline, people find that when prices are not **, it actually means that the purchasing power of money in people's hands is stronger. Especially when it comes to prices, more items can be purchased for the same amount of money. However, the current situation seems somewhat counterintuitive. From January to November this year, the overall increase in CPI was only 03%, which is a very low growth rate and even lower than the estimated 2% growth for the whole of 2022. In other words, despite the increase in people's purchasing power, consumer demand has not been stimulated more, and economic growth has suffered from difficulties.
This situation is a matter of concern for the current economic development. According to statistics, China's household consumption contributes nearly 60% of the gross domestic product (GDP), and the lack of consumer demand may drag down the sustained growth of the economy. Therefore, how to boost consumption has become an urgent problem to be solved.
When the total amount of money increases on a large scale, but the demand for consumption does not increase accordingly, it has to cause people to think about where money is going. In the aforementioned situation, where will the 22 trillion yuan of additional currency issuance go?This is a perplexing question and a phenomenon worth pondering.
On the one hand, these currencies did not enter the hands of ordinary people for consumption, which led to a lack of purchasing power in society. On the other hand, these currencies do not seem to be used effectively in the economic sphere, and do not cause problems such as prices**. The existence of this series of problems not only raises concerns about economic development, but also raises concerns about the risk of deflation.
Overall, although the additional currency issuance can provide liquidity for economic development, the promised results have not met our expectations. Therefore, we need to think of more effective ways to use these currencies to stimulate consumer demand and promote the healthy development of the economy.
The problems in the economic field are complex and diverse, and there are not only explanations of economic theories, but also the combined effect of various factors. For the phenomenon of CPI decline but no inflation, many factors can be comprehensively considered, such as supply and demand, market expectations, policy guidance, etc.
First of all, supply and demand are one of the important factors affecting inflation. In the current economic situation, although the monetary aggregate has increased, due to the lack of consumer demand, the supply side is relatively large, resulting in prices not being obvious**. In addition, in recent years, China's economic growth has slowed down, and industrial overcapacity has not been fully digested, which has also suppressed the price of goods.
Second, market expectations also have an important impact on the formation of inflation. The current economic situation is uncertain, and people have certain expectations for future economic trends and policy changes. The change in expectations will have a certain impact on market behavior, which will affect the rise and fall of prices. When the market generally expects inflation to be low, it adjusts to expectations, resulting in prices.
Finally, policy orientation is also one of the important factors affecting inflation. **When formulating monetary policy, it is often regulated according to the current economic situation and development needs. If you believe that the current inflation risk is not large, you may choose to ease monetary policy to boost economic growth. At the same time as increasing the issuance of currency, it is also necessary to increase policy support for consumption stimulus, so that money can flow, and then promote the sound development of the economy.
To sum up, the continuous decline in CPI has not caused inflation, and complex economic phenomena and factors are involved behind it. We need to constantly look for solutions through comprehensive analysis and reflection to promote economic development and solve the problems we are currently facing. Therefore, in the future economic development, we need to pay more attention to consumption stimulus, increase policy support, and promote the coordination and improvement of all aspects of economic growth, so as to achieve the goal of sustained and healthy economic development.