For various reasons, inflation is quietly coming to our country. In order to avoid the abnormal development of China's economy, we must adjust the income policy, monetary policy and foreign economic policy, raise interest rates, reduce wages and adjust the industrial structure to curb the spread of inflation and make China's economy develop steadily.

1. What is the inflation gap?

Inflation gap refers to the gap formed when the actual level of total demand is greater than the national income in full employment, or refers to the difference between investment and savings in full employment economies, that is, the difference between total demand and total supply. In the case of inflation gap, the demand value of goods and services will exceed the value that can be generated under the condition of full employment. Since the economy is already in a state of full employment, there are no idle resources in society that can expand the actual output, so it is impossible to increase the actual output. Therefore, when there is an inflation gap, the economy will face upward pressure, and the economy will achieve balance at a nominal level higher than full employment income. When the economy is balanced, if the balanced national income is higher than the national income at full employment, there is an inflation gap; If the balanced national income is lower than the national income at full employment, there will be an unemployment gap.

2. Types of inflation:

2. 1. Moderate inflation

2.2. Accelerating inflation

2.3. Extreme inflation

3. Inflation rate

Formula: inflation rate = (current price level-benchmark price level)/benchmark price level (benchmark price level selects the price level of a certain year as a reference to compare with the price levels of other periods to measure the current inflation level).

4. Inflation

4. 1. The meaning of inflation: Inflation refers to the long-term high price rise.

4.2. Causes of inflation:

4.2. 1. Since China implemented the expansionary monetary policy in the mid-1990s, and in recent years, the central bank issued too much money, which led to the rapid growth of money, which led to inflation.

4.2.2. Demand pulls inflation, and demand pulls inflation theory analyzes inflation from the perspective of aggregate demand.

Its view is that total demand is greater than total supply. I see that for various reasons, the total demand is greater than the total supply, which leads to inflation.

4.2.3. There are two reasons for moderate inflation: demand pull and cost push. In recent years, the increase in food prices in China is caused by the decline in food production, which is a supply problem and cost-driven; It is normal that the investment demand range is 20%, but China has reached 25% now, especially the rising prices of chemical and metallurgical industries have caused the rising prices of raw materials, which is demand-driven. Moderate inflation is also a factor in international communication. The expansion of foreign direct investment and export demand has pushed up domestic prices, which is demand-driven; However, the domestic prices of crude oil and other international primary products have risen due to imports, which is a supply factor and a cost driver.

4.2.4. Inflation is generated in a closed environment. Due to the circulation of prices, there has been no hyperinflation in the world in recent decades, but there have been many deflation. Because of exchange rate control, it can't keep up with foreign markets, which objectively leads to inflation.

4.2.5. Due to the imbalance of China's economic structure, the demand of workers in lower production sectors is close to that of workers in higher production sectors, which leads to the wage growth rate of the whole society exceeding the economic growth rate, thus leading to inflation.

4.2.6. The hidden cause of inflation-ecosystem imbalance. Ecological imbalance is the internal cause of inflation.

(1) When ecological imbalance occurs, the stable and coordinated ecological structure will be destroyed, and the efficiency of material circulation and energy circulation will be affected and reduced, resulting in the decrease of effective material and energy output of the ecosystem, that is, the decrease of ecological supply; In addition, people's demand is increasing with the development of social economy, which makes the overall demand for ecology in the whole society increase sharply, causing the total demand to be much higher than the total supply, and the demand for products is in short supply, which will inevitably drive the corresponding prices to rise continuously, thus generating demand-driven inflation.

(2) One of the manifestations of ecological imbalance is the deterioration of ecological environment, which will definitely cost a lot of money. The social cost of governance comes directly or indirectly from all citizens and manufacturers, and this social cost will eventually be borne by manufacturers, which will increase the production cost of enterprises, thus raising the price of products, and the corresponding result is price increase. Ecological imbalance also makes natural resources decrease day by day, and the difficulty of exploitation increases day by day, which leads to the increase of resource exploitation cost and the price of raw materials and energy, and increases the inherent cost of manufacturers. Causing so-called cost-driven inflation.

(3) The imbalance of ecological structure and environmental pollution caused by ecological imbalance will not only lead to the imbalance of total supply and demand, but also distort the relationship between supply and demand. Even if the output of the whole society can meet the demand of the whole society, the unreasonable resource allocation structure can not meet the total demand, which makes the price of products in inefficient departments rise, which in turn drives the price level to rise. This is so-called institutional inflation.

5. Countermeasures and measures for inflation

Controlling inflation is a complicated project. In the process of controlling inflation, we should not only eliminate the root causes of inflation from a macro perspective, grasp the strength of controlling inflation, take into account the requirements of enterprise reform and financial reform in time, but also speed up the adjustment of industrial structure to improve the allocation of resources, and also consider the changes of economic behavior of microeconomic entities to adapt to inflation control. Because inflation has various types and reasons, the destructive effect on the economy is obvious, and many economists are now studying it deeply and trying to control it. These measures mainly include:

5. 1. Monetary policy. Monetary policy is one of the most basic macroeconomic policies and an important means to control inflation. The use of monetary policy to curb inflation is mainly achieved through two ways: one is to reduce the growth rate of money supply to curb aggregate demand; The second is to raise interest rates to curb investment demand and stimulate the increase of savings, thus ensuring the balance between total demand and total supply. By reducing the amount of money in circulation, the Bank of China has increased the purchasing power of money and reduced the pressure of inflation. At the same time, by raising the deposit and loan interest rates of commercial banks and the financial market interest rates, reducing the currency in circulation and the scale of credit, we can reduce the scale of investment, balance savings and investment, increase goods and services, and eliminate the gap between total demand and total supply, thus achieving the purpose of preventing inflation.

5.2. Income policy. The income policy mainly adopts the policy of wage and price management to prevent the upward trend of wages and prices caused by the mutual price increase between trade unions and monopoly enterprises. Its purpose is to try to control inflation without increasing unemployment. The theoretical basis of income policy is mainly cost-driven inflation, because cost-driven inflation is due to the increase of supply cost, especially the increase of wages, which leads to the rise of price level. Therefore, we must adopt the following forms of restraining income policy: determine the wage price guidance line and take compulsory measures to limit the wage price increase. Income policy based on tax payment.

5.3. Foreign economic policy. Generally speaking, inflation and balance of payments in China have a push-pull effect. In the case of inflation in all countries, China must adopt appropriate foreign economic policies to reduce the adverse impact of international balance of payments imbalance on domestic prices and prevent the import of foreign inflation. Measures in this regard mainly include:

(1) A floating exchange rate is implemented. Under the floating exchange rate system, the fluctuation of China's currency against foreign exchange rate is completely determined by the relationship between market supply and demand.

(2) Take measures to coordinate with other countries in trade and finance, such as strengthening cooperation with other countries, controlling the growth rate of money supply in various countries, improving the international financial system and other anti-inflation measures to prevent the spread of global inflation, and so on.

5.4. Strengthen macroeconomic adjustment. In order to maintain the basic stability of the overall price level, relevant departments must pay close attention to, be good at discovering and studying major changes in the relationship between supply and demand in the market in time, and make timely and appropriate adjustments by using policy guidance and economic means. It is necessary to strictly control the introduction of new projects and intensify price inspection. In addition, it is necessary to strengthen the coordination of key products in key industries, especially in view of the shortage of energy and raw materials that may be caused by the excessive growth of some industries, promote the optimal allocation of production factors, stabilize market supply, and ensure a basic balance between supply and demand.

5.5. Effectively strengthen food production, ensure food supply and stabilize food prices. Conscientiously implement the central government's policies on encouraging grain production, and ensure that policies and measures such as direct subsidies to farmers, subsidies for improved varieties, price management of agricultural materials, and agricultural tax relief are truly put in place. Strengthen flood control and drought relief and crop field management. While doing a good job in purchasing summer grain and autumn grain, we should do a good job in organizing and dispatching grain sources to ensure the supply of grain in the market and maintain the basic stability of food prices.

5.6. Reduce the level of labor wages, macro-control distribution, narrow the income distribution gap, achieve the unity of fairness and efficiency, reduce the level of labor wages, control the growth of income and product costs by controlling the growth of wages, and then control the price level to prevent price increases due to the growth of labor wages.

Two or four factors have increased the inflation risk in China.

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Considering that the contradiction of balance of payments surplus has a tendency to spread to price increase after continuous accumulation, from the domestic and foreign factors, the current price increase is not only affected by accidental or temporary factors, but also the inflation risk has an upward trend.

The second quarter monetary policy implementation report released by the central bank on the 8 th said that at present, the trend of China's economic growth from fast to hot is more obvious, and problems such as excessive trade surplus, excessive credit supply and excessive investment growth are still outstanding; High-energy-consuming industries are growing rapidly, and the situation of energy conservation and emission reduction is still grim; The pressure of rising prices continues to increase, especially some food prices and housing prices that involve the vital interests of the people have risen rapidly.

The report pointed out that at present, domestic supply and industrial production capacity are growing rapidly, and bottlenecks have been alleviated. In addition, the state has issued a series of comprehensive measures to stabilize the rise of food prices in time, all of which have a certain inhibitory effect on the rise of food prices. However, considering that the contradiction of the balance of payments surplus has a tendency to spread to the price increase after continuous accumulation, from the domestic and foreign factors, the current price increase is not only affected by accidental or temporary factors, but also the inflation risk has an upward trend.

According to the analysis of the report, the following four factors increase the risk of inflation:

The prices of food such as grain and meat are easy to rise and difficult to fall in the short term.

There is upward pressure on energy prices. Recently, the international oil price has gone up again. Promoting resource price reform and strengthening environmental protection in China will also push up the price of energy resources. In addition, after the centralized release of production capacity, the shortage of coal, electricity and oil transportation will not be ruled out again in the future.

Labor costs are rising. On the one hand, it will be reflected in the prices of products and services, on the other hand, it may drive up consumer prices.

The increase in inflation expectations has further increased the pressure of rising prices. In the second quarter of 2007, the People's Bank of China conducted a questionnaire survey on urban depositors nationwide, which showed that residents' expectation index of future prices reached 40.2%, the second highest level since the 1999 survey. In addition, the public's perception of inflation is mainly based on the prices of frequently purchased goods. At present, the meat, poultry and eggs with the fastest price increase are important commodities for residents' daily consumption, so the inflation felt by residents may be higher than the actual inflation level. When "perceived inflation" is greater than "actual inflation", price expectations may be further pushed up.

In addition, the report pointed out that the previous price increase of grain, meat, poultry and eggs has been gradually transmitted to the downstream food processing, catering and other industries, so it is necessary to pay close attention to the price transmission problem to prevent the overall price increase.

The central bank said that, overall, in the context of rising global inflationary pressure, China needs to pay more attention to the risk of the transmission of rising food prices to general consumer goods.

The central bank said that it will continue to implement a prudent monetary policy, adhere to moderate tightening, maintain necessary regulatory efforts, strive to maintain a stable monetary and financial environment, control inflation expectations, and keep prices basically stable. Continue to coordinate the use of open market operations and deposit reserve ratio tools, actively innovate hedging tools according to the needs of macroeconomic regulation and control, and strengthen liquidity management. We will steadily push forward the reform of interest rate marketization, promote the construction of the benchmark interest rate system in the money market, and further enhance the regulatory role of price leverage. In accordance with the principles of initiative, controllability and gradualism, we will continue to improve the RMB exchange rate formation mechanism and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

The report of the central bank also reminds that commercial banks should attach great importance to the risks hidden by maturity mismatch and currency mismatch. The report holds that in recent years, with the active development of financial market, especially capital market, the asset selection behavior and investment preference of Chinese residents and enterprises have changed significantly, which has further caused some changes in the term structure of assets and liabilities of commercial banks. In addition, the currency structure of assets and liabilities of commercial banks has also changed, and the phenomenon of currency mismatch has gradually emerged.

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