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BIZCHINA / Review & Analysis
A more accurate CPI
(China Daily)
Updated: 2007-08-28 07:14
The reality of people's daily lives should be respected in calculating
the consumer price index (CPI), says an article in Yanzhao Metropolis
Daily. The following is an excerpt:
Beijing's municipal bureau of statistics on Saturday released a detailed
explanation of how the CPI is calculated. It said investigators surveyed
the prices of 200 kinds of commodities. The prices of pork and eggs are
surveyed once every five days, while those of other commodities are
surveyed every 10. As to why housing prices are not included in the
calculation of the CPI, statistics officials said housing prices are in
the investment category, which is in line with international statistical
practices.
The CPI has become a sensitive thing as commodities prices have risen. It
is of course a good thing that the statistics bureau explained how it
calculates the CPI. This helps satisfy citizens' right to know and will
ease public concern.
But the explanation of why the CPI does not include housing prices fell a
little short of the mark. It is true that housing prices are not factored
into the calculation of the CPI under international practices. But as
housing prices are so closely connected to people's daily lives, we
should not stick so fast to such international practices.
In countries with well-developed market economies and stable social
structures, housing prices are not included in the calculation of the CPI
not only because housing prices belong to the category of investment, but
also because housing transactions mainly involve existing housing instead
of new construction. Under such circumstances, it is appropriate to
factor rent into the CPI.
(For more biz stories, please visit Industry Updates)
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