Chinanews, Beijing, Dec. 19 – Judging from the overall performance of CPI this year, China’s CPI growth rate has kept at an average level of 1.3-1.4% month by month. It is expected that CPI growth rate for the whole year will not exceed 1.5%. According to European Central Bank, a country will have to raise its interest rate once its CPI growth rate exceeds 2%. Based on this judgment, it is not likely for China to raise its interest rate at the moment, said Wei Guixiang, head of the Urban Social Economic Investigation Department at the National Bureau of Statistics (NBS), according to China Securities Journal.
He made the statement while attending a seminar, titled "The Quality of China's Statistics: Its Challenge and Countermeasures", held by Shanghai University of Finance and Economics.
According to previous data released by NBS, in last November, Chinese CPI grew by 1.9% over the same period last year, much faster than the 1.4% growth rate in October and hitting a new high over the past 20 months. Some market institutions even said that if housing price raise was included, Chinese CPI growth rate would exceed 5%. The rapid growth of CPI boosts market expectancy for an interest rate raise.
To Gui, it is inappropriate to include housing price into CPI index. He said that by international practices, housing has always been categorized as a type of fixed assets investment rather than a daily consumption commodity. While CPI reflects people's consumption level within a certain month, their expenditure on housing purchase will not change every month. So, housing cannot reflect people's changing consumption level and it is not suitable to include housing expenditure when calculating the CPI.
In spite of this, Gui said that housing expenditure does take up an increasingly larger proportion of people’s total expenditure. Based on this, he suggested that when calculating CPI, the weighted measurement of consumption goods should be considered and the weighted measurement of housing commodities should be increased in CPI.
