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CPI calculation adjusts add to reading

02-16-2011 08:39 BJT Special Report:China’s Economic Data for Jan. |

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Many have been wondering how China reached it's better than expected CPI figure. The National Bureau of Statistics has in fact "adjusted" the way it calculates the consumer price index. But far from making inflation look like less of an issue, it actually "added" to January's figure.

After the adjustment, housing was given a much larger share of the new CPI basket, while the weighting of food prices was reduced.

The prices of cigarettes, wine and clothing will also play a smaller role. Analysts say the changes reflect China's growing economy has allowed its residents to spend a smaller portion of their incomes on basic needs, and more on big-ticket items.

Officials say the changes are the result of a five-year review of the CPI.

Dong Yaxiu, Official of National Bureau of Statistics said "We make adjustments every 5 years. We started to calculate the CPI by the fixed-base price index since 2000. The bureau fixed the base in 2000, and adjusted it in 2005. 2010 is another year for adjusting the base, so the change is actually a routine."

The official also says the adjustment won't largely affect the CPI reading.

Dong Yaxiu said "The change in form will affect the index. But based on our calculations of recent data and data from last year, it turns out the adjustment don't have a big influence on the index."

Many in the market had expected that the adjustment would lower the CPI. But the bureau says the adjustment actually added 0.02 percentage points to January's reading.

Editor:Xiong Qu |Source: CNTV.CN

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