By Wang Likun & Liu Tao, Research Institute of Market Economy, DRC

Research Report, No.390, 2021 (Total 6455) 2021-12-14

Abstract: In 2021, the global commodity prices have risen sharply, and its impact on China’s consumer prices is expected to be felt in 2022. Influenced by factors such as the cold weather in winter in the Northern Hemisphere and the cycling change of some agricultural products, China’s consumer prices are expected to show a wide-ranging upward trend in 2022. The year-on-year CPI increase is estimated to be around 3%, generally showing a trend of slightly higher rise at the beginning and the end of the year, and slight rise in the middle of the year. Due to the wide range of inflation and its close connection with daily life, residents will feel more strongly about the actual price increases. In the context of increasing downward pressure on the economy, a wide range of price increases may lead to a stagflation-like situation which will adversely affect the stable growth and structural adjustment of the Chinese economy. It deserves great attention and some policy suggestions are as follows. The government should set price stability a priority goal and an important task of China’s economic work in 2022, and coordinate the relationship between steady growth, price stability and green development. The government also need to introduce a cost-sharing mechanism to ease price transmission pressure, ensure supply, reduce the impact of cold weather in winter, do everything possible to stabilize consumer prices, and ensure people’s well being.

Keywords: CPI, inflation, risks, stabilize prices, 2022