Fluctuation And The Factors Driving Beijing's Consumer Price Index

The city of Beijing as the capital of China has got much more attention of the world.To be an international metropolis, its economic development has been widely concerned.During the period of "Eleventh Five Plan", Beijing’s economy level has achieved a rapidgrowth; the income level of urban residents has greatly increased especially. But therestill has some problems, consumption expenditure of urban residents has slowed down,changes in the structure of consumption is not ideal. From the rising trend of CPI,consumer goods prices rose too fast to restrict the growth of consumer spending whichhas become one of the main reasons. In the past five years, eight kinds of consumer priceindex showed different degrees of growth, fluctuation of food index is obvious. Soresearch on the consumer price index of Beijing and its driving factors is important.In this paper, we take CPI and its system of Beijing as the main research point.Firstly, applied31provinces of country in three different types of price index as aneconomic indicator by clustering the provincial panel data analysis. It turns out thatamong geographically adjacent regions are divided into the same category. Beijing,Tianjin and Hebei have reacheed the similitude level of commodity prices, consumptionpatterns gradually converged to one arrangement, Beijing’s commercial price has somecertain representativeness. Secondly, by using autoregressive moving average model,exponential smoothing method and conditional heteroscedasticity model and othermethods to explore the CPI’s trend and volatility in recent period, we found that seasonalvariation is the main factor affecting the fluctuation index sequence, and irregular factorsinduced cluster volatility.Then, we pay attention on food price index for some corresponding research, byusing main principal components regression method to explor the impact of its indicatorson the total index, from result, food prices largely influnced by grain, aquatic productsand eggs, and fruits and vegetables prices shows weak influence on that. Using VARmodel analysis of the interactive relationship between fruit price and vegetable price,there has same change to price relationships between them; also the affection of fruitprice to vegetables should be stronger. Finally, studied on external variables of thedisposable resident’s income and bank rate impact on the CPI, we found that the seasonalfactor income is the key influencing factor to price index fluctuation, and inflation ratehas unilateral impact on interest rates.Beijing’s consumer price is affected by internal and external driving factors. On onehand, the system within the food price index is accounted for approximately third of theoverall index proportion. On the other hand, it is driven by strong external variables,disposable income as the representative of the seasonal component, which is anotherfactor influencing CPI volatility. The seasonal factor is one of the key components toCPI’s long-term trend, irregular factors is the main reason why the price index influtationclusters.