From Chinese Press

The poor need separate CPI

(China Daily)
Updated: 2011-02-25 07:55

The consumer price index (CPI) for low-income people should be calculated separately, because even a slight price rise can wreak havoc in their lives, says an article in Youth Times. Excerpts:

The impact of price rise on high- and low-income groups is different because their consumption level and pattern differ greatly. The main cause of the high inflation today is rise in prices of food, which accounts for the largest part of poor people's consumption. Since CPI influences people of different income levels differently, it cannot reflect the real predicament of the poor.

The National Bureau of Statistics recently released the CPI for January and adjusted it by lowering the statistical weight of food and raising that of overall factors of livelihood, inviting criticism.

The government needs to calculate the CPI for the low-income group separately, which can be done by giving weight to their actual consumption structure. Since the government should know the actual impact of price rise on poor people's lives, it ought not to be confused by the average CPI.

The CPI for the poor should be calculated separately to set the standard for minimum living allowance and subsidies. If the impact of price rise is higher than that of the average CPI on the poor, the government should grant more subsidies and allowances to them. This is important not only to meet their needs, but also for maintaining social stability.

(China Daily 02/25/2011 page9)