Zhongjin: Fiscal expansion supporting domestic demand remains the key to boosting prices.

Zhongjin pointed out that the month-on-month CPI in April was stronger than usual, mainly driven by increases in gold, travel, and imported beef prices, but the year-on-year CPI has been negative for the third consecutive month. At the same time, the pig cycle continues to decline, prices for replacement products are falling, and prices for clothing, alcohol, education, and household services are weaker than usual, indicating that demand is still insufficient. Due to the impact of tariffs and sluggish construction investment, the year-on-year decline in PPI has further widened, with a month-on-month decrease of 0.4%. The decrease in PMI procurement and factory prices indicates that the month-on-month decline in PPI may widen. Although the US-China tariff negotiations have to some extent alleviated the risks of declining exports, the issue of insufficient demand is still prominent, and fiscal expansion to support domestic demand is still key to boosting prices.