China's statistics of the CPI, composed of food, tobacco, alcohol and supplies, clothing, household equipment, health care, transportation and communication, entertainment, education and culture, residential prices of eight categories of products, including 251 classifications, covering all aspects of clothing, food, housing and transportation. The weight of the eight categories of products in the CPI is not the same, the highest is food, accounting for 34%, the others are: entertainment, education and cultural goods and services 14%, housing 13%, transportation and communication 10%, health care personal goods 10%, clothing 9%, household equipment and maintenance services 6%, tobacco, alcohol and supplies 4%.
The CPI index is often used as an important indicator to observe the level of inflation. If the CPI rises too much, it indicates that inflation has become a destabilizing factor for the economy, and there is a risk that the central bank will tighten its monetary and fiscal policies, thus creating an uncertain economic outlook. As a result, excessive rises in the index tend to be unwelcome by the market.
Generally speaking when the CPI>3% increase we call INFLATION, is inflation; and when the CPI>5% increase, we call him SERIOUS INFLATION, is severe inflation.
(CPI) is a lagging data, but it is often an important reference indicator of market economic activities and government monetary policy. CPI stability, full employment and GDP growth are often the most important socio-economic goals. However, from the perspective of China's reality, the stability of the CPI and its importance is not as developed countries believe that "there is a certain authority, the market's economic activity will be adjusted according to changes in the CPI".