The government work report proposes in this year's main development target that the increase in consumer prices for residents will be around 2%. For many years, this target has been around 3%, but this year it has been lowered compared to previous years. How should we view this adjustment? To answer this question, we need to first understand the significance of the Consumer Price Index (CPI). Price, connected to the macro economy on one end and thousands of households on the other, is a "barometer" that reflects supply and demand, a "wind vane" that guides resource flow, and a "thermometer" that measures the warmth and coldness of people's livelihoods. Due to its extensive involvement and impact on multiple parties, CPI, which reflects the level of prices, usually requires a sense of balance, and being too high or too low is not good. A sustained and significant increase will trigger inflation, raise the cost of living, weaken consumption capacity, and hinder economic growth. Continued decline will also affect real interest rates, constrain corporate investment willingness, and be detrimental to residents' employment and income growth. A more ideal and healthy state is a 'mild rise'. Looking at the performance of China's CPI in the past few years, from 2021 to 2024, the annual CPI growth rates in China were 0.9%, 2%, 0.2%, and 0.2%, respectively. Overall, prices remain stable. There is a positive aspect to it. In recent years, thanks to the solid foundation of China's manufacturing industry, stable grain production, and the avoidance of monetary policy flooding, we have avoided the high inflation that some developed economies are currently experiencing. Especially the prices of daily necessities such as firewood, rice, oil, salt, meat, milk, eggs, and poultry have remained stable, preventing people's lives from being "discounted" due to rising prices. We should also face up to the problem of overall low price levels. The target for CPI growth in 2024 is around 3%, with an actual increase of 0.2%. The causes are multifaceted: looking at the world, the overall fluctuation and decline of international commodity prices are affected by the weak growth momentum of the world economy; Looking at supply, some industries and fields have experienced temporary oversupply, with some companies engaging in "price for quantity" or even "internal competition"; The ability and willingness to consume need to be further improved based on demand; Looking at key areas, the real estate market is in a period of deep adjustment... These issues are the source of downward pressure and the crux of the sustained low price operation. Based on the current downward pressure on prices and in combination with the overall macroeconomic policy goals, this year's government work report proposes a CPI increase target of "around 2%", which reflects seeking truth from facts, being practical, and being proactive. This pragmatic goal can not only ensure basic livelihood, but also stabilize expectations, promote investment, improve economic circulation, and promote sustained economic recovery and improvement. Prices are operating within a reasonable range, and we have the conditions, capabilities, and foundation. Let's first look at the policy intensity. Reading the government work report, one measure after another has been implemented accurately and with great intensity. For example, "vigorously boosting consumption" and "comprehensively expanding domestic demand" can help resolve the contradiction of "supply exceeding demand". For example, the comprehensive rectification of 'internal competition' will make prices better reflect quality and prevent 'bad money driving out good money'. For example, 'stabilizing the real estate and stock markets' can release wealth effects and better boost consumption. In addition, increasing countercyclical adjustments in macroeconomic policies such as finance and currency will also improve the supply-demand relationship and provide guarantees for a moderate rebound in prices. Look at the market heat again. Since the beginning of the year, price movements have shown positive signals. In January, CPI increased by 0.7% month on month from being flat in December 2024, and expanded from 0.1% in December 2024 to 0.5% year-on-year. In February, due to factors such as the wrong month of the Spring Festival, prices fell slightly. However, after deducting the impact of the wrong month of the Spring Festival, CPI increased by 0.1% year-on-year, and the trend of moderate price recovery has not changed. In addition, in February, the manufacturing PMI rose to 50.2%, returning to the expansion range, proving a significant improvement in production and demand. The non manufacturing PMI, composite PMI and other indices are all in the expansion range, indicating that the level of economic prosperity has rebounded and suggesting that total demand will gradually improve. Overall, boosting consumption is the key to smoothing the economic cycle and ensuring a moderate rebound in prices. Its "logical chain" is: boosting consumption, optimizing supply - achieving a more balanced supply-demand relationship - reasonable price recovery - improving corporate profits and benefits - creating more employment, helping residents increase income - enhancing consumption capacity - further expanding consumption. We have high-quality supply, broad demand, and abundant policy tools, which give us sufficient ability and conditions to break through the bottlenecks of the economic cycle, balance the supply and demand, and achieve an optimized combination of stable growth, stable employment, and reasonable price recovery. The ability, courage, and willingness of ordinary people to consume, reasonable income for enterprises, guaranteed employment income, and quality of life for residents are the "healthy state" that China's economy is committed to achieving in the new year. Let's work together. (New Society)