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Explainer | China inflation: how is it measured and why is it important?
- Inflation captures the rising costs of goods and services in an economy and, as a result, the decreasing purchasing power of consumers
- China’s inflation is most often measured by the consumer price index (CPI), which tracks the prices people pay for a series of goods and services
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What is consumer inflation?
Consumer inflation is the rising costs of goods and services in an economy and, as a result, reflects the decreasing purchasing power of consumers, all other things being equal. Rising income can offset the impact of rising inflation. “Real” income growth is adjusted to subtract the impact of inflation.
How is China’s consumer inflation measured?
It is most often measured by the consumer price index (CPI), which tracks the prices people pay for a “basket” of goods and services. The list of goods is weighted, with those more often bought for daily consumption getting a higher weighting.
China's consumer price index (CPI) 2010-2020
| Year | Headline CPI |
|---|---|
| 2020 | 2.50% |
| 2019 | 2.90% |
| 2018 | 2.11% |
| 2017 | 1.56% |
| 2016 | 2.00% |
| 2015 | 1.44% |
| 2014 | 1.99% |
| 2013 | 2.62% |
| 2012 | 2.65% |
| 2011 | 5.40% |
| 2010 | 3.30% |
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Source: National Bureau of Statistics
As the prices of everyday goods rise, Chinese consumers feel the effects of inflation directly, as an increase in their general cost of living. China has never disclosed the weighting of its CPI basket, but estimates suggest food, tobacco and alcohol account for around 30 per cent, while pork – a daily staple of the Chinese diet – is believed to be the most heavily weighted product.
CPI is a key way to measure changes in purchasing trends and to track inflation.
What is China’s consumer inflation rate?
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