(China Daily)
Updated: 2007-08-28 07:14

The reality of people's daily lives should be respected in calculating the consumer price index (CPI), says an article in Yanzhao Metropolis Daily. The following is an excerpt:

Beijing's municipal bureau of statistics on Saturday released a detailed explanation of how the CPI is calculated. It said investigators surveyed the prices of 200 kinds of commodities. The prices of pork and eggs are surveyed once every five days, while those of other commodities are surveyed every 10. As to why housing prices are not included in the calculation of the CPI, statistics officials said housing prices are in the investment category, which is in line with international statistical practices.

The CPI has become a sensitive thing as commodities prices have risen. It is of course a good thing that the statistics bureau explained how it calculates the CPI. This helps satisfy citizens' right to know and will ease public concern.

But the explanation of why the CPI does not include housing prices fell a little short of the mark. It is true that housing prices are not factored into the calculation of the CPI under international practices. But as housing prices are so closely connected to people's daily lives, we should not stick so fast to such international practices.

In countries with well-developed market economies and stable social structures, housing prices are not included in the calculation of the CPI not only because housing prices belong to the category of investment, but also because housing transactions mainly involve existing housing instead of new construction. Under such circumstances, it is appropriate to factor rent into the CPI.

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