Event
State Statistics Bureau releases average major food price change (from May 11 to May 20, 2010) and cost price of partial core industrial products of key companies (May 20, 2010) on May 24, 2010, which indicates that vegetable price further declines and prices of iron, cement, major nonferrous metals and chemistry products continue falling.
Our Analysis and Estimation
Vegetable price and cost price of core industrial products go on sliding, which will effectively relieve inflationary pressure.
Year-on-year increase of vegetable and fruit prices in May 2010 is lower than that of April.
In May 2010, partial industrial price obviously declines, and its influence on downstream distinctly lessens. Prices of iron, cement, nonferrous metals and partial chemistry products see substantial slide compared with that of April; year-on-year increase of nonferrous metals and cement is lower than that of April; year-on-year increases of iron and partial chemistry products perform mixed compared with that of April.
Conclusion
Since May 2010, year-on-year increase of vegetable and fruit see substantial decline, which lessens pressure to CPI since the beginning of 2010. Macro-deflation regulation reduces pressure on downstream industrial products. Year-on-year increase of CPI will probably below estimation and Q2 CPI will not sharply rise.