My question is about employment. The import and export volumes for January and February dropped considerably. What has been the direct influence on the labor market and unemployment rate? Thank you.
Thank you for another question about employment. First, the epidemic has certainly influenced enterprises, especially small and medium-sized enterprises which have suffered greater blows. Furthermore, the number of college and university graduates this year will reach 8.74 million, a record high, which would exert pressure on the labor market. China's epidemic prevention and control measures have seen remarkable results. However, the situation is still severe outside the country. The world economy is facing emerging challenges including a volatile financial market and commodities prices. The growth rates of the world economy and trade are expected to drop to a certain degree, which will impact China's economy as well. Considering such circumstances, I have to say that such pressure on employment is remarkable.
Second, we should recognize the resilience of China's economy. Riding good momentum from epidemic prevention and control efforts, enterprises are starting to resume operations and production, so recovery of the economy will accelerate in the second quarter or second half of the year. At the same time, stronger hedging macro-policies will be introduced. Stronger policies to promote employment will also come into force. Employment will certainly improve in the second half of the year, and the surveyed unemployment rate will decline. Thank you.
I have a question about pricing. We noticed that the growth rates of CPI in January and February remained at around 5%. The People's Bank of China recently cut the requirement reserve ratio for RMB deposits again and subsequent monetary policy will likely be looser. Will such measures lead to higher prices? Thank you.
First, to the questions about the prices of consumer goods, the growth rates of CPI in January and February did stay above 5%, which is relatively high. The year-on-year growth rate of CPI in February, however, was 5.2%, 0.2 percentage points lower than that of January. And the growth rate compared to the previous month was 0.8%, 0.6 percentage points lower than the January level. In general, there are three major reasons behind the high CPI growth rate over the first two months of the year. First, food. The high growth rate of CPI at present has mainly been caused by a rise in food prices, especially the price of pork, which recorded a year-on-year growth rate of 135.2%. Pork prices contributed 3.2 percentage points to the CPI growth rate. That means that 3.2 of the 5.2 percentage points were from pork. The growth of food prices has remained high. Second, the epidemic has taken a toll. Prevention and control measures by concerned parties have raised cargo transportation costs. Third, the tail-raising factor. Volatile prices in last year have had major influence on the first two months of 2020. It should be noted that the growth rate in February which exceeded 5% could have easily been only 1% without major contributions from food and energy, 0.5 percentage points lower than that of the previous month, maintaining a relatively low level. This shows that although the CPI is high, it is mostly caused by structural factors.
Second, it is doubtful that the CPI would grow even faster in the following period. Why? The three factors I just mention: The first is food. China achieved record high grain production last year. Agricultural production still has pretty strong momentum. Hog inventory and those available for slaughter have both increased year-on-year. The price of hog has gradually declined from a peak. Compared to mid-February, the price of hog dropped by 4.6% in late February, and the figure further decreased by 1.3% in early March. So, pork price shows a general trend of tumbling from recent highs. The second factor is the epidemic. Following effective prevention and control efforts, logistics and operation of enterprises are recovering quickly. Supply of industrial goods will increase and circulation of materials will be further smoothened, which will help stabilize prices. Third is the tail-raising factor. From the big picture of the whole year, the tail-raising factor of prices will diminish, especially in the second half of the year. There is no evidence pointing to a continuous surge in the CPI. The growth rate of CPI will steadily decline, especially in the second half of the year.
Third, the monetary policy. In the context of the epidemic and complicated and grave situation in China and around the world, macro policies should be stronger and prudent monetary policies should be more flexible and moderate. We have carried out targeted cuts of the requirement reserve ratio, directed lowering of interest rates and increased refinancing and rediscount. The core purpose of those measures is to support enterprises through maintaining rational liquidity and encouraging decrease in interest rates or quoted interest rates. So instead of strong stimulus policies that would have economy-wide impact, we opted for targeted aid, which will not drive price growth dramatically from the perspective of monetary policy.
Although recent price growth rates have been remarkable, the growth rate of the CPI is highly likely to taper off in the future. Thank you.