Home buys come under CPI ambit

12:15, April 08, 2010      

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China's Consumer Price Index (CPI), a main measure of inflation, would be made more relevant to the dramatically rising home price since next year, said the National Bureau of Statistics (NBS) on Wednesday.

The factors of mortgage loan rate and home prices would be given more weight when calculating CPI, Wei Guixiang, head of the statistics bureau's urban, social and economic survey department, said at a press conference.

"That means home price at the time would be reflected in CPI figure," he added, without elaborating on detailed timetable or method.

The move was regarded at a direct response to the uprising public criticism against housing-related data released by the bureau.

The statistics bureau has said that China's average home prices rose by 1.5 percent for the whole of 2009. But observers reckoned that actual growth is much higher than the official rate. They said it could be 50 percent or even more as homebuyers have become more active after the economy shows solid signs of recovery.

Meanwhile, others said the CPI figure by the agency cannot reflect the rising trend of home price that has became a financial burden to Chinese families. Home price is currently not officially included in the basket of CPI factors.

In addition, the bureau has already lifted the weight of residence category in its CPI calculation from 14 percent in late 2009 to nearly 15 percent this year, to better reflect structural changes in consumption.

Wei said the weight would continue to rise as the bureau starts a regular CPI structural adjustment every five years starting in 2010, and the proportion of food would show a decline from the current 32 percent. "Because we are aware that people's outlay on residence has been increasing rapidly and food consumption is a shrinking part for a family," he said.

In the second half of this year, the bureau would conduct a comprehensive nationwide survey on residents' consumption to revaluate weight of the eight categories, which include food, alcohol, cigarette and supplies, clothing, house equipments supplies and maintenance, medical, healthcare and personal supplies, communications, entertainment and education supplies and services, and residence.

Analysts are divided on the government's effort to get closer with China's reality by adjusting the weight of home price in CPI.

Xu Qiyuan, analyst at Chinese Academy of Social Sciences, said the moves are a major step for a more accurate description of price level, despite CPI figures might show a larger scale of fluctuation. "For example, the house loan rate declined last year and dragged down CPI, but in reality, people didn't reduce their spending on homes and rents," he said.

While Zheng Chaoyu at Renmin University of China and He Liping at Beijing Normal University insisted the government should pay more attention to international standards and avoid putting more "Chinese characteristics" into statistical systems.

The bureau would also publicize weights proportion of the eight categories starting next year to enhance openness and transparency, said Wei.

Source: China Daily

(Editor:祁澍文)

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