Relationship between national economic growth rate and CPI
The narrow sense of national economic growth rate is the growth rate of GDP. Broadly speaking, the development of national economy is based on the all-round development of human beings and the harmonious development between human beings and nature, which is the basic meaning of green GDP. CPI is the consumer price index, and the growth rate of the national economy is not necessarily proportional to CPI. CPI is mainly influenced by the market and national economic policies, and regional changes will also bring CPI. Therefore, the growth rate of national economy is not the only factor that leads to the increase of CPI. The increase of national economic growth rate will improve people's ordinary living standards, but it will not eliminate the gap between the rich and the poor, but will widen the gap. The simple truth is that if you increase your income by 1 1,000 yuan, people whose income is 1 1,000 times will earn 1 10,000 yuan. Although the ratio is fixed, the gap value is increasing sharply. For example, the growth rate of the national economy has driven the development of real estate, and as a result, most people can't afford to buy a house. The decisive factor of people's living standard is not the growth rate of national economy, but people's income and purchasing power. With the increase of economy, people's purchasing power will also increase, which shows that this country is truly developing for all. CPI, or ConsumerPriceIndex, is a price change indicator that reflects the prices of products and services related to residents' lives, and is usually used as an important indicator to observe the level of inflation. If the consumer price index rises too much, it shows that inflation has become an unstable factor in the economy, and the central bank will take the risk of tightening monetary and fiscal policies, leading to uncertain economic prospects. Therefore, the excessive rise of the index is often unpopular with the market. For example, in the past 12 months, the consumer price index rose by 2.3%, which means that compared with 12 months ago, the cost of living rose by 2.3% on average. When the cost of living goes up, the value of your money will go down. That is to say, a banknote of 100 yuan received a year ago can only buy goods and services worth 97.70 yuan today. Generally speaking, when the increase of CPI & gt3% is called inflation, it means inflation; When the CPI> growth rate is 5%, it is called serious inflation. The CPI price index is very important and enlightening, so we must grasp it carefully, because sometimes it is announced that the index is rising, the currency exchange rate is improving, and sometimes it is the opposite. Because the level of consumer price index shows the purchasing power of consumers and also reflects the economic prosperity, if the index drops, it reflects the economic recession, which is bound to be unfavorable to the trend of currency exchange rate. But if the consumer price index rises, will the exchange rate be favorable? Not necessarily, it depends on the "increase" of the consumer price index. If the index rises moderately, it means that the economy is stable and upward, which is of course beneficial to the country's currency. But if the index rises too much, it will have a negative impact, because the price index is inversely proportional to purchasing power. The more expensive the price, the lower the purchasing power of the currency, which is bound to be unfavorable to the country's currency. If the impact on interest rate is considered, the impact of this indicator on foreign exchange rate is more complicated. When a country's consumer price index rises, it shows that its inflation rate rises, that is, its currency purchasing power weakens. According to purchasing power parity theory, its currency should weaken. On the contrary, when a country's consumer price index drops, it shows that the country's inflation rate drops, that is, the purchasing power of money rises. According to the purchasing power parity theory, the country's currency should appreciate. However, because all countries take controlling inflation as their primary task, rising inflation also brings opportunities for rising interest rates, which is beneficial to the currency. If the inflation rate is controlled and reduced, interest rates will also tend to fall, which will weaken the currency in this region. The policy of reducing inflation will lead to the "tequila effect", which is a common phenomenon in Latin American countries.