Zhongjin: If we want to continue effectively driving inflation back to its historical average, policy support is still needed.

According to the research report of the CITIC Securities, in July, under the efforts of the "anti-involuntary overtime" policy, the control and price increase in key industries drove the month-on-month decline in PPI to narrow to -0.2%. In addition, the issuance of new funds, the fading of online promotion disturbances, and the rise in gold prices improved the prices of industrial consumer goods, and also pushed the core CPI to rise year-on-year for the third consecutive month. However, compared to 2016, the current supply-side capacity governance is more market-oriented and legalistic, resulting in a softer effect on price improvement. The year-on-year decrease in PPI is still at a two-year low of -3.6%, and the year-on-year change in CPI has turned flat. Looking ahead, the fading drag of tail factors may drive improvements in the year-on-year PPI and year-on-year CPI after August, but in order to effectively promote inflation to return to the historical center, policy reinforcement is still needed, and expanding domestic demand is even more critical.