A Study On The Cause Of Inflation In The Post-Crisis Of China

China has undertaken several inflations, say from1984to1989and from1992to1996, since taking Reform and Open policy. But after the last inflation ended in1996, China has experienced low price level for several years. However, a new round of inflation began in2003but was interrupted by worldwide financial crisis. With the deepening influence of the worldwide financial crisis, inflation rate changed from high rate to beneath zero unexpectedly and dramatically. And after being below zero for ten months, CPI found its new way to rise and formed a new round of inflation.Compared to the inflation happened in2003-2007, the current round of inflation has a entirely different background, which happens under the worldwide financial crisis. The transform from deflation to inflation is very fast and the price rise process happens rapidly. Although it still keeps characteristics of non-equilibrium inflation, the unbalance factors weakened. And it appears to be more characteristics of the balanced inflation. And the most prominent feature of this round of inflation is that it does not accompanied by economic overheating.So, this article first studies this round inflation from four dimensions such as monetarism inflation, demand pull inflation, cost push inflation and structural inflation. Next select eight specific variables as the Mi, M2and M1growth rate, M2growth rate and the Shanghai Composite Index, above-scale industrial added value growth rate, industrial producers purchase price index and agricultural prices to conduct empirical analysis. Via J-J co-integration test and Granger causality test to determine causality and Impulse response function to analyze the specific dynamic impact of each variable on inflation. This article gets some conclusions as follow:Firstly, as the growth rate of labor productivity in primary industry lowers than the average growth rate of society, there has always existed rising pressure of prices of agricultural products since2003.And the only difference is simply the degree.Secondly, the fluctuation in money supply has a significant impact to inflation on the long-term. Since the financial crisis, the government in order to stimulate the economy, money supply has a rapid increase and the resulting asset prices are important causes of current inflation.Thirdly, Rapid recovery industrial growth rate due to economic stimulus policies is also one of the important reasons of the current round of inflation, but the increase in the cost of production of this round has little effect to inflation. In addition, fluctuation in prices of agricultural products is still an important reason for the current round of inflation.Finally, this article provides some suggestions including mobility management, making efforts to increase agriculture productivity, and enhancing the independence of the People’s Bank of China to cope with the current inflation.