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CPI Becomes China's Major Price Indicator
China has adopted the consumer price index (CPI) as the major indicator of price changes in place of the retail price index (RPI) this year, the National Bureau of Statistics (NBS) announced Thursday, December 7.
Starting from January, 2001, the country will compile and release CPI with the price level in 2000 as the base for comparison.
Consumer price index is widely used around the world to indicate inflation or deflation in a country.
According to NBS, the shift from RPI to CPI as a major indicator of inflation or deflation in line with international practice and aims to make statistics more precise and easier to be understood.
The development of a market economy in China requires changes in the compiling and releasing of the price index, said NBS. The RPI that China had used as an indicator of inflation in the planned economy could no longer reflect the real changes of present-day price levels.
The new method has adopted the "Chain Laspeyres Formula" to reflect the real trend of price fluctuation. It has also added more consumption items into the survey base, including automobiles, cellular phones, housing and education.
In order to reflect the changes in the mix of consumption for households, NBS also requires its branches at all levels to adjust the weight in calculating CPI every year.
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