Differences Analysis Of Factors That Affect The Consumer Price Index

Since the 21st century, consumer price index of our country is basically in a rising trend and fluctuate severely. The eight consumer price indexes, such as food, alcohol, tobacco, clothing, transportation are also showing different fluctuation characteristics. Also, the consumer price index in rural areas is continually higher than the urban areas. These not only have seriously affected our people’s normal life and consumption, but also have greatly restricted the healthy and all-round development of Chinese economy. Therefore, it is quite necessary to have a research on the difference of factors that affect the eight indexes and the urban and rural consumer price index. This paper will analyze and compare such factors as asset prices, household vulnerability, RMB index in order to have a clearer understanding of factors that affect the consumer price index.Using the GMM method, this paper firstly take the income, interest rates and the RMB index as control variables and analyze the impact of asset prices and household vulnerability and other factors that affect the national consumer price index. The results show that:the overall factors of eight categories with the consumer price index is basically the same, but there are also some differences in the eight categories. The consumer price index has a strong short-term persistence, and it is mainly reflected in the food, health, education and housing areas; Asset prices will promote consumer price index significantly, and the impact of real estate prices is greater than the stock prices. In addition, the household vulnerability and RMB index have greater impacts on the consumer price index.Based on the asset prices and household vulnerability two factors, this paper will compare the factors between urban and rural consumer price index. The results show that there are significant differences in the factors between the urban and rural consumer price index. Compared with the urban consumer price index, Rural Consumer Price Index is not only affected by its own short-term sustainment, but also is significantly affected by the asset prices and the elderly dependency ratio. In particular, there are significant differences in the CPI of clothing, housing, transportation and education.In short, this study not only provides a scientific basis for controlling the fluctuation of the consumer price index and narrowing the gap between urban and rural, but also has a certain practical significance for guiding the people’s consumption.