What does CPI mean?
CPI is short for Consumer Price Index. CPI is a macroeconomic indicator that reflects changes in the price levels of consumer goods and services generally purchased by households. It measures the relative number of changes in the price level of a set of representative consumer goods and services over time in a specific period of time, and is used to reflect the changes in the price level of consumer goods and services purchased by households.
The consumer price statistical survey is the final price of social products and services. On the one hand, it is closely related to the lives of the people, and it also has an important position in the entire national economic price system. It is an important indicator for economic analysis and decision-making, monitoring and control of the overall price level, and national economic accounting. The rate of change reflects the degree of inflation or deflation to a certain extent. Generally speaking, a comprehensive, contrasting, and continuous rise in prices is considered inflationary.
The main impact of CPI
Although CPI is a lagging data, it is often an important reference indicator for market economic activity and government monetary policy. Stable CPI, adequate employment and GDP growth are often the most important socio-economic goals. However, we still have to look at the reality of each country, and it may be more authoritative for developed countries, and economic activities in their markets will be adjusted according to changes in CPI.
CPI’s impact on exchange rates
Usually in a healthy economic situation, raising the dollar’s interest rate can make the dollar more attractive. If the rise in US dollar interest rates is mainly due to rising inflation, it will affect the attractiveness of the US dollar. Higher inflation rates have damaged the value of US dollar investments held by foreigners, so the continuous increase in CPI has a negative impact on the US dollar. Currency traders are also very sensitive to other nuances. For example, traders in the foreign exchange market believe that the Fed has acted quickly and flexibly controlled inflationary pressures, and the U.S. dollar may maintain its value or even appreciate.
CPI coverage type
The National Consumer Price Index (CPI) covers 8 categories, including food, tobacco, alcohol, clothing, housing, daily necessities and services, transportation and communications, education, culture and entertainment, healthcare, and other supplies and services consumed by urban and rural residents nationwide. 262 Prices of goods and services in a basic category.
What does PPI mean?
What does PPI mean? PPI is an inspection of the production price index. PPI is an index that measures the trend and degree of changes in the ex-factory prices of industrial products. It is an important economic indicator that reflects the price changes in the production field during a certain period. It is also important for formulating economic policies and national economic accounting. in accordance with. The Producer Price Index (PPI) is different from CPI. Its main purpose is to measure the total cost of a basket of goods and services purchased by a company. Since companies will eventually transfer their costs to consumers in the form of higher consumer prices, it is generally believed that changes in the production price index are useful for predicting changes in the consumer price index.
PPI statistics and release methods
The Industrial Producer Price Index released by the National Bureau of Statistics each month includes the ex-factory price index of industrial producers and the purchasing price index of industrial producers. The ex-factory price index of industrial producers reflects the changing trend of ex-factory prices when industrial enterprises’ products are first sold. The purchase price index of industrial producers reflects the trend and range of changes in the purchase price of industrial enterprises as intermediate input products.
The statistical survey of factory prices of industrial producers covers the prices of more than 20,000 industrial products in 1638 basic categories; the statistical survey of purchase prices of industrial producers covers the prices of more than 10,000 industrial products in more than 900 basic categories.
Industrial producer price surveys adopt a combination of key surveys and typical surveys. Companies with an annual main business income of more than 20 million yuan use key survey methods, and companies with an annual main business income of less than 20 million yuan use typical survey methods. The industrial producer price survey involved more than 50,000 industrial enterprises across the country.
The conduction relationship between PPI and CPI
Consumer Price Index (Consumer Price Index, CPI) is a relative number that measures the price level of a set of representative consumer goods and services over time in a specific period of time, and is used to reflect the price level of consumer goods and services purchased by residents The changes in the rate of inflation are often used to observe the level of inflation, which is an important macroeconomic indicator and an important reference for national macroeconomic regulation.
PPI measures the total cost of a basket of goods and services purchased by an enterprise. All means of production and means of living must be processed by the enterprise to form products, and then flow into the consumer market downstream of the industrial chain. Theoretically, according to the law of price transmission, the cost of production and processing of enterprises diffuses downstream through the industrial chain, and will eventually be transmitted to consumers. Therefore, it is generally believed that changes in PPI have a certain lead to CPI.
Since PPI is mainly biased towards the price of means of production, and CPI is mainly biased towards the price of food and also includes the price of services, the two are not strictly corresponding in the scope of the investigation, so CPI and PPI sometimes deviate. For example, in the data released by the National Bureau of Statistics this time, the PPI fell 1.2% year-on-year, indicating that the price of industrial production materials fell compared with last year and market demand was weak, but the CPI rose 3% year-on-year. Part of the reason for the divergence between CPI and PPI can be attributed to rising food prices. In this period, the price of CPI food increased by 11.2% year-on-year, which affected the increase of CPI by approximately 2.21 percentage points, especially the price of pork increased by 69.3%, which affected the increase of CPI by approximately 1.65 percentage points.
World Bank Global Infrastructure PPI Investment Annual Analysis Report
At the same time, the conduction of PPI to CPI is also affected in many ways. Supply and demand in the market. In the case of a seller’s market, companies have strong pricing power, and most of the increase in PPI can be transmitted to CPI in excess; in a buyer’s market, companies’ pricing power is weak, and the increase in PPI can only be partially transmitted to CPI. The degree of marketization of commodity prices. In the case that commodity prices are determined by the market, the price transmission between PPI and CPI is relatively smooth, but for some special commodities, their prices are subject to government-implemented pricing or guidance prices, and the transmission of costs between upstream and downstream Obstructed.
The difference and connection between PPI and CPI
According to the law of price transmission, PPI has a certain impact on CPI. PPI reflects the price level of production, and CPI reflects the price level of consumption. The fluctuation of the overall price level generally first appeared in the production field, then spread to the downstream industry through the industrial chain, and finally spread to the consumer goods in the circulation field.
Since CPI includes not only the prices of consumer goods but also the prices of services, CPI and PPI are not strictly corresponding in terms of statistical standards. Therefore, it is possible that the changes of CPI and PPI may not be consistent in a certain period. But CPI and PPI have been in a state of divergence for a long time, which does not conform to the law of price transmission. If the price transmission is broken, the main reason is that the industrial product market is in the buyer’s market and the government’s artificial control of the price of public products. At present, the prices of industrial products that can be successfully transmitted (mainly the prices of energy raw materials such as electricity, coal, and water) are mainly within the scope of government price adjustments.