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Starting from 2024, China may face four major price reductions

2024-05-13 17:06:59 view

Recently, the official CPI increase in March was only 0.1% year-on-year, indicating that the economy is in a deflationary state. However, the prices of goods related to the lives of ordinary people are still steadily rising. For example, in the past, the last time I went to the supermarket for shopping, it was only 1 to 200 yuan, but now the last time I went to the supermarket, it was at least 3 to 500 yuan. Strictly speaking, the Chinese economy is currently in a state of structural deflation, and the prices of goods related to the daily lives of the people are still hovering at high levels.

Although the prices of some domestic products are still steadily rising, there will still be four major commodities in a wave of price reductions in 2024. In addition to housing prices, there are also three types of goods, including cars, small appliances, and pork, that are in a period of price reduction. So, why are these types of products experiencing a wave of price reductions? Let's analyze together:

Firstly, housing prices are showing a trend of "stabilizing while decreasing"

In 2024, domestic housing prices will continue their previous downward trend. The average price of second-hand housing in Baicheng is 15088 yuan/square meter, a month on month decrease of 0.56%, an increase of 0.19 percentage points compared to February, and has been declining for 23 consecutive months. There are two main reasons for the decline in housing prices this year:

On the one hand, in March this year, the top 100 real estate companies in China had a sales amount of only 358.3 billion yuan. This means that compared to last year, sales have plummeted by 45.8% this year. So, nowadays real estate companies can only improve their performance by exchanging price for quantity. On the other hand, in March 2024, the number of newly listed second-hand houses nationwide increased by 35.6% compared to February. Obviously, this means that more and more speculators are no longer optimistic about the future market, and the downward pressure on housing prices is still significant.

Secondly, car prices will continue to decline

This year's Spring Festival has just passed, and the automotive industry has ushered in a new round of price reductions. BYD Auto was the first to announce a price reduction, with two new energy models under its umbrella having a minimum selling price of 79800 yuan, both of which have decreased by 20000 yuan. Subsequently, new energy brands such as Changan Qiyuan Automobile, Nezha Automobile, and SAIC GM Wuling followed suit with price reductions. The price reduction in this car market trend ranges from 5% to 15%, with prices dropping from a few thousand yuan to tens of thousands of yuan.

There are three main reasons for the price reduction of cars: firstly, the income of the middle class has decreased or they are unemployed, and their consumption ability has been severely weakened. Second, under the influence of the Russia-Ukraine conflict, the international oil price is rising, the domestic oil product price is also rising, and people's travel costs are rising. Thirdly, technology companies such as Huawei and Xiaomi entering new energy vehicles have led to overcapacity in the automotive industry. So, competition among peers is fierce, and a drop in car prices is inevitable.

Thirdly, the prices of small household appliances will fall

Starting from 2024, the domestic small home appliance industry has also experienced a wave of price reductions, mainly in areas such as air conditioning, refrigerators, washing machines, and microwaves. There are two reasons for the price reduction in the small home appliance industry:

On the one hand, originally there were only three leading companies in the home appliance industry, including Gree, Midea, and Haier, but now technology companies such as Huawei and Xiaomi have entered the home appliance industry across industries. The entire home appliance industry is experiencing overcapacity. On the other hand, the technology innovation in the home appliance industry is relatively fast, often with old products not sold out yet and new products already on the shelves. In this situation, home appliance companies often lower prices and promote old products in order to quickly recover funds.

Fourthly, the price of pork will continue to decline

Nowadays, the price of pork in many supermarkets in China has dropped to 22-26 yuan/jin, and the price of pork is still gradually decreasing. The reasons for the decline in domestic pork prices are as follows: Firstly, in the past few years, pork prices have skyrocketed, and the pig farming industry has made abundant profits. As a result, various capital groups have invested in the pig farming industry. This has resulted in a severe overcapacity of pork production capacity now. Furthermore, as people's income levels increase. Nowadays, people are paying more and more attention to their physical health, reducing their intake of pork and replacing it with other meat products such as cows, sheep, chickens, and ducks. So, the demand for pork is decreasing now.

In fact, the price decline of these four types of goods is still very beneficial for ordinary people. For example, a decrease in housing prices and car prices can reduce the expenses of ordinary households. However, this also reflects the decline in consumption among the population as their income decreases. So, it is important to increase the income of the people.

The decline in prices of small household appliances is mainly due to the fast upgrading and upgrading speed of household appliance enterprises, which means that people can use increasingly advanced household appliance products. As for the decline in pork prices, it also indicates that the demand for pork in society is gradually decreasing, and other meat products are becoming more and more popular. People are paying more attention to their physical health.

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