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The Impact of Epidemic on Price Performance and Policy Options for Price Stabilization at the Current Stage (No. 23, 2020)


By Wang Likun, Institute of Market Economy, DRC

Research Report, No. 23, 2020 (Total 5767) 2020-2-28

Abstract: At present, China is at the critical stage of winning the battle against COVID-19 and ensuring the realization of economic and social development goals. Affected by various factors, the market supply and demand performance is complex and volatile, inducing greater pressure on price stabilization. With the increasing downward pressure on economic growth, CPI and PPI are expected to rise periodically in the first half of the year, and price growth may exceed GDP growth, showing some “stagflation” characteristics. The short-term impact of the virus is estimated to be limited, but if the epidemic lasts longer, it will further increase downward pressure on the economy, which requires close attention. In the near future, while strictly controlling the spread of COVID-19 and accelerating the resumption of production, measures need to be adopted to enrich supply, properly handle supply and demand and guide market expectations through regulation in a bid to promote price stability, prevent the risk of a sharp rise in prices and provide a favorable market environment for the realization of economic and social development goals.

Key words: COVID-19, epidemic, price of commodities, periodic “stagflation”, policy options