CPI Calculation Excluding Housing Sparks Debate

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Recently, the Beijing Bureau of Statistics has, for the first time, published how the country's consumer's price index is calculated. Among the goods and services taken into account, the price of housing is left out. It's said excluding housing is in line with international practices, since housing is a form of investment, not consumption. Does the calculation of the CPI stand to represent the actual living condition of citizens? There are different voices in the media, we collected a few for your reference.

Reporter:

An article in the Guangzhou Daily questions the exclusion of housing prices following the international convention. The author argues that societies under a developed market economy and stable social structure don't have such massive purchases and the trade of new apartments buildings as in China.

The author goes on to say that the situation varies from country to country, the composition of the CPI should firstly represent the livelihood of its citizens. And this, the author emphasises, is the point of composing the CPI of any single country. The article suggests that the government should take into consideration factors that occupy the day-to-day life of people when calculating such statistics as the CPI.

In a similar vain, an article in the China Business Times argues along a different line. It compares China to the US in terms of the composition of the CPI. The CPI in China measures people's livelihood from a total of eight areas, such as food, transportation, clothing, living and entertainment, while in the US, the CPI appears as an average variable based on 200 goods and services. In this regard, the author comments that the international convention concerning the CPI is out of place and useless in reference to China.

The author argues for long-term considerations, not counting housing prices in the country's CPI underestimates inflation, therefore making the government figures less reliable. Some economists believe that by taking housing price into consideration, inflation would be much higher.

So the article strongly recommends that the government should take housing into consideration when calculating the CPI, otherwise, it says, the CPI would be no different than a glass wall blocking off the government from the realities of the citizen's everyday living conditions.