At present, deflation risk has become an important issue that cannot be ignored in the economic field, and we deserve high vigilance. Data released by the National Bureau of Statistics on the morning of June 9, 2025 showed that the price level CPI in May fell by 0.1% year-on-year. This data seems small, but it is of great significance, because this is the year-on-year negative growth of prices for four consecutive months.
In-depth research on the reasons for the decline in prices. According to data from the Bureau of Statistics and some analysts, the year-on-year decline in food prices and energy prices are the main incentives.
In the food field, taking pork as an example, due to the expansion of pig breeding scale in the early stage, the market supply was sufficient, and pork prices continued to decline, which lowered the overall food price index; in terms of energy, affected by the changes in the supply and demand pattern of the global crude oil market, international oil prices fell, which led to the decline in the prices of energy products such as gasoline and diesel, which in turn had a negative impact on prices.
However, we should also understand that every price fluctuation can find surface incentives, but more importantly, grasp the deep trend of economic operation through phenomena.
From the economics major, prices have increased negatively year-on-year for more than three months, and the economy has approached the brink of deflation. Looking back at 2025, since February, prices in March, April and May have all shown negative year-on-year growth trends.
This continuous price decline will not only affect consumers' consumption expectations, but will also have an impact on enterprise production and operation. Consumers may delay consumption due to expected prices to continue to decline, corporate product prices fall, and profit margins are compressed, which may reduce production and layoffs, forming a vicious cycle and hindering the healthy development of the economy.
It is worth noting that as early as the beginning of 2025, the country has determined a moderately loose monetary policy, which is one of the few loose monetary policy expressions since the global financial crisis in 2009, highlighting the country's attention to the economic situation and determination to regulate.
Although the central bank just implemented interest rate cuts on May 20, the current prices continue to be weak and the economy has half its foot in the quagmire of deflation. Judging from the overall situation of macroeconomic operation, it may be difficult to reverse the current situation by just one interest rate cut, so it is still necessary to continue to cut interest rates significantly.
Perhaps some people will question, the interest rate cut was just cut in May, is it necessary to lower it again? We might as well analyze it from data and economic reality.
In the past six months, prices have increased negatively year-on-year in four months, which means that there is a serious problem of insufficient market demand and economic vitality that needs to be improved. The potential harm brought by deflation cannot be underestimated. It will increase the debt burden, increase the actual debt costs of enterprises and individuals, further inhibit investment and consumption, and form a great resistance to economic growth. We must remain highly vigilant about this.
Some people also worry that continuing interest rate cuts will put pressure on the RMB exchange rate. Against the backdrop of the continuous tariff game between China and the United States and the rise of global protectionism in 2025, the global economic environment is complex and changeable. At this time, to some extent, it is beneficial to exports by appropriately reducing interest rates.
Take my country's manufacturing industry as an example, the moderate depreciation of the RMB can reduce the price of export products, enhance the competitiveness of products in the international market, promote the increase in orders of export companies, and thus drive the development of related industries and employment growth. Moreover, judging from the beginning of the year, the RMB is relatively strong against the US dollar and has a certain room for adjustment, so exchange rate pressure should not be the main contradiction that hinders interest rate cuts at present.
ColumnJune Market: Dynamic Tracking Analysis and Outlook Author: Daogedao Finance 199 coins 3 people have purchased View Disclaimer: Any of the above content is from public market information and is for your reference and study and observation only. This content does not constitute suggestions for the purchase, sale or holding of any product and is not used as a basis for your investment. You should make independent investment decisions and bear the capital risks and losses at your own expense. Investment is risky, so be cautious when entering the market.
