Watch CPI inflation is undervalued by 3%

This reporter Zhenghong invited economic experts Liu Jingsong National Bureau of Statistics released last week, the October consumer price index CPI further hit the recent highs. But even so, people still feel that the numbers are low, because the price that is actually felt every day is much higher. What's the reason? The old question is that CPI, now, at least temporarily, cannot be used to measure the extent of our inflation.　　Liu Jingsong, director of the Shanghai Academy of Social Sciences Economic Prediction Center, recently focused on the issue of inflation, which is shocking: if inflation is measured by CPI, the inflation rate in recent years is about 3% undervalued. Want to figure out the inflation problem?　　So please put your eyes on this more time, follow Professor Liu's thinking, the CPI, inflation, good "see" enough. The conventional definition of inflation, excluding the rise and fall of real estate prices, is now a lot of discussion about inflation, with some equating CPI with inflation. Some have raised real estate prices sharply as a basis for inflation in China. Why are there disagreements? One important reason, Liu Jingsong, is that the debate is inconsistent with the definition of inflation. According to traditional textbooks, inflation refers to the overall level of prices in the real economy, the only indicator of which is the GDP deflator.　　As the GDP deflator is involved in the accounting of GDP, it is difficult to obtain timely, so in real life, the general use of a series of price indices to replace, mainly the consumer price index, the factory price index of industrial products, raw material fuel power purchase price index. Liu Jingsong said that the traditional definition of inflation, the rise and fall of property prices is not included, which directly led to the residents ' understanding of price increases and the understanding of the monetary authorities inconsistent. In order to clarify the problem of inflation in China, we can introduce the concept of generalized inflation and narrow inflation. Generalized inflation refers to the overall level of commodity prices in all entities, including real estate commodities. The so-called narrow-sense inflation refers to the traditional textbook inflation.　　With such a definition, the inflation situation is clear. Inflation rate of six consecutive years "moderate" then our inflation level is high or low?　　The answer is "moderate". Let's take a look at Liu Jingsong's calculations. Last year, China's social consumer goods retail total of 12.5343 trillion yuan, commercial housing sales total of 4.3995 trillion yuan, the total commercial housing sales and social consumer goods retail total proportion of 35%. In the same period, CPI fell 0.7% and house prices rose 21%. It is possible to measure the generalized inflation rate last year: 0.35x21%-0.65x0.7%=6.89%.　　It can also be estimated that 2004-2009, China's generalized inflation rate of 5.79%, 5.75%, 2.8%, 8.27%, 4.67%, 6.9%, the arithmetic average is 5.7%, presenting a "moderate inflation" characteristics. The GDP deflator isThe scientific measure of narrow-sense inflation, measured by this measure of the narrow sense of inflation, the 2004-2009 narrow inflation rate of 7.61%, 4.09%, 3.64%, 8.79%, 8.78%, 2.3%, the arithmetic average is 5.87%, also a moderate inflation. The CPI is a serious underestimate of inflation in China, which is clearly much higher than the CPI in both broad and narrow terms.　　Liu Jingsong points out that in the six years of 2004-2009, the generalized inflation level and the narrow sense of inflation are very close to each other, which confirms the reliability of the data. And if the CPI as a measure of inflation, then China's 2004 to 2009 inflation rate of 3.9%, 1.8%, 1.5%, 4.8%, 5.9%, 0.7%, the arithmetic average is 2.87%. This is the ideal level of inflation. Unfortunately, this data is not popular, and the amount of inflation we calculated earlier is also very large, about 3% difference.　　In other words, in the six years between 2004 and 2009, if we use CIP to measure inflation, then inflation is about 3% undervalued. For statistical reasons, CPI itself is undervalued Liu Jingsong that CPI can not be used to measure the extent of inflation in China for the time being. The main reasons are two points: first, China's gross domestic product, the consumer part of the population is not even 40%, with 40% of the part to replace all, the error must be very large.　　Second, for statistical reasons, the CPI itself is undervalued. It turns out that the CPI was obtained by the National Bureau of Statistics through monthly price survey data, so the survey samples were critical. Because the sample adjustment lag, causes the sample mostly is the obsolete commodity, the elimination commodity, but is not the mainstream consumer commodity, thus does not be able to reflect the price rising degree truly. At the same time, China's current calculation of the price index is the Laplace formula, weight adjustment is very important.　　Unfortunately, China's consumption structure has changed dramatically, but the weight has not been adjusted in time. In addition, the direct subsidy of grain price is also the reason that CPI is underestimated. The state exempted the agricultural tax, directly to the grain farmers subsidies, which is equivalent to the "dark rise" of food prices, but "dark rise" is not counted into the CPI.　　All this has led to an underestimation of the CPI. Implementation of the policy of "positive real interest rate" as soon as possible, of course, the use of CPI as a reference to measure the narrow sense of inflation is not no good, but must be integrated and simultaneous inspection of factory price index, raw materials and fuel power purchase price index, should not only look at the CPI.　　Liu Jingsong said monetary authorities must be pegged to broad inflation targets, or pegged to narrowly defined inflation indicators, or pegged to a set of price indices rather than simply pegged to the CPI. He suggested implementing the "positive real interest rate" policy as soon as possible. The 6-year negative interest rate policy has seriously violated the interests of depositors, which caused the real estate bubble and unfair income distribution.Important factors, not conducive to the stability of our society, but also not conducive to the long-term economic stability and healthy development. In particular, he suggested that the government's work report should not say how much the CPI would be controlled in the second year, but how much inflation would be controlled in the second year, and that "our annual inflation rate is more appropriate than 4% per cent."