CPI And Its Sub-Components Correlation Analysis

CPI is the main indicator of inflation, CPI’s abnormal fluctuations will hinder the social’s stabilize and economic’s normal operation。 Meanwhile, when the government conducting macroeconomic analysis, and formulating related policies, CPI is an important reference.Based on this, I believe that studying correlation between CPI and its sub-components and leading or lagging relationship has important practical significance.In this paper, based on CPI and its eight sub-components’monthly year data from January2001to December2013, using the method of continuous wavelet transform, we find out CPI and its sub-components’s fluctuations relationship.Using the method of cross-wavelet,we analysis correlation between CPI and its sub-components.The results show that food prices, housing prices and CPI have the strongest coherence.In the short term,the food prices’fluctuation is leading CPI’s about two months.In the long term,residential prices’fluctuation is leading CPI’s about eight months.In the short and medium term,tobacco products, health care price and CPI have strong coherence.Tobacco and liquor prices’fluctuation is lagging CPI’s about six months.In the medium term medical care prices’fluctuation is leading CPI’s about3.3months.Other sub-component price and CPI has weak coherence.The article explained volatility relationship between CPI and its sub-components,also formulating relevant policy recommendations based on the conclusions. Smoothing the sub-components who is leading CPI’s fluctuations can be pre-smoothing fluctuations in the CPI. Therefore, this paper proposes policies about food prices, housing prices,and health care prices to stabilize prices.