A Study Of Reasons For Changes In Overall Price Level In China From 2006-2009

With rapid economic development, China has left a period of economic shortage. Price reforms and a market system have basically been completed. The government's macro-regulation ability has greatly improved. However, with the fluctuation of global prices, the general price level of China changed dramatically between 2006 and 2009. In new economic conditions, what causes the changes in price in China? What is the relation between the fluctuation of globle price and general price in China? What is the most appropriate response to these changes? What areas should be given special attention in the future development and regulation? To address these problems, research of reasons for changes of the general price level is very important.This article divides the course of the general price changes into three stages:the stage of price stability in 2006; an inflationary period from Jan-2007 to Feb-2008; period of deflation and gradual price increase from Mar-2008 to Dec-2009. This article analyzes deeply the reasons for price changes of each stage with statistical analysis methods. The research shows that the changes in the price of agricultural products is the direct cause for the fluctuation of general price; drastic changes in policy, people's psychological expectations, investment and foreign demand, and the changes in international commodity prices are reasons for the dramatic changes in the general price. In each period, the amount of influence these factors have on the general price level is different. The irrational mode of economic growth and economic structure are also deep-seated reasons. However, the currency factor is the most important cause for general price changes. Finally, this article gives a corresponding message based on the research results.