China's monetary policy should consider the inflation factors affected by the aging of population and the transition toward low-carbon economic growth pattern, and the full-year consumer inflation is predicted to grow by less than 2 percent from 2020, the central bank governor said on Thursday.
The consumer price index is likely to be higher later this year than earlier, influenced by multiple factors including the COVID-19 pandemic and economic rebound. The factory gate price, which is indicated by the producer price index, showed rapid growth this year, due to the low base in 2020, and we need a longer term to observe the change of PPI, said Yi Gang, governor of the People's Bank of China.
Commodity prices surged recently, and it is true that global inflation boomed in the short term. "But there is divergence on whether inflation can last for a long time," Yi said at the 13th Lujiazui Forum 2021 in Shanghai.
"During the pandemic last year, China adopted normal monetary policy, and the domestic aggregate demand was relatively stable, which was conducive to maintaining the overall price stability," Yi added.
But pressures of both inflation and deflation should not be ignored, said the governor.
The aging population would constrain residents' consumption and raise deposits, which will curb inflation, while the green growth pattern, which can change production activity and people's lifestyles, will cap carbon emissions and boost the costs of using high-carbon energy, Yi said.