The Analysis Of Relationship Between Main Price Indices And Macro-Economic In Our Country

The Macroeconomic price index is the indicator of price level’s movement. Central government use macroeconomic price index to determine the economy is overheating or overcooling, then decide whether measures are need to be taken to stimulate the economy or to deal with the economy cooling treatment. The CPI has been China’s important reference index of macroeconomic regulation and control. With economical restructure and the decline of household final consumption rate and Engel’s Coefficient, CPI can not accurately appraise China’s macroeconomic situation. If we still use CPI, on the one hand, CPI can not accurately appraise China’s macroeconomic situation, on the other hand, will make macroeconomic policy not only can’t meet the corresponding target but also may cause inhibition to the economy. Therefore, in the circumstances of economical restructure, study what kind of price index can reflect macroeconomic operation state is significant.At first, this paper analyzes the current main price indices’ definition and main uses. Then this paper puts forward the study of price index must be linked with the change of industrial structure in the perspective of the change of economic structure. Based on the conclusion, this paper analyzes why CPI can not accurately appraise China’s macroeconomic situation under present economic structure. Labor and transportation costs’ rising cause the rising of agricultural products’ price in the course of transition period. Agricultural products share of CPI and GDP are different, with the increasing of residents’ income, the household final consumption rate decrease to a very poor level. So we should no longer use CPI as a index of inflecting the current state of the economy and the overall price level. Based on resident consumption structure, this paper propose that CPI can be used as the cost of living index of the low-income group.China is a country with large scale of manufacturing. The paper analyze industrial products’ power of pulling economy development, the relationship between industrial products and export and the relationship between the industrial products and consumption. Then draw a conclusion that PPI is a better price index to reflect the current state of the economy and the overall price level. It is a more accurate price index. Based on the data of PPI, we can come to a conclusion that Chinese economy is in the state of cost-push and demand shrink deflation. In recent years, government implement the monetary tightening policy to restrain CPI’ rise. But it has no effect on CPI and does harm for Chinese economy.Based on above analysis, this paper argues that the government needs to implement active macroeconomic policy to alleviate the difficulty of the enterprise. But no price index can accurately reflect the change of the price level. The government should adjust something of the price index to adapt to the change of industrial structure and to make changes, or even create new price index to adapt to new economic environment.