A Study On Multi-level CPI From The Perspective Of AHP

Changes in price are closely related to every consumer’s life and stabilizing price has been one of the main tasks of China’s macroeconomic regulation.Consumer Price Index(CPI)plays an important role in inflation measuring,national economic accounting,and macroeconomic policy.China’s consumer price indexes released by the National Bureau of Statistics have been questioned for a long time.There are obvious defects in the establishment of the CPI,including: 1)the simplicity of CPI.Based on experiential rules,National Bureau of Statistics compiles three kinds of CPI including national CPI,urban CPI and rural CPI,which ignores the consumption structure homogeneity in the same group and heterogeneity in different groups;2)differentiation of consumption structure.Since reform and opening-up,people’s living standard has been continuously improved,and the consumption pattern and preference have been greatly changed.While behind the fast economic growth rate,the gap between the rich and the poor is widening.There exists significant difference of consumption standard and structure not only between urban and rural,but also among urban and rural people.The contradiction between simplicity of CPI and differentiation of consumption structure makes it impossible for the existing CPI to reflect price changes in different groups of consumers,as well as provide reference for economic policy.As a result,this paper focuses on the establishment of multi-level CPI,building the framework of theoretical analysis from two aspects of CPI programming method and weight measurement.The multi-level CPI is established according to a variety of standards.By comparing the multi-level CPI with the existing one,the effectiveness is proved.First of all,according to the classic index theory,the appropriate calculation formula is chosen and amended.Considering that people from different groups have distinct feelings toward price changes,this paper uses Analytic Hierarchy Process(AHP)to measure the expenditure shares from the perspective of consumers’ psychological feelings.According to the comparison matrix from sample survey,consumers’ subject feeling can be quantified,which indirectly measures expenditure shares of goods and services.Secondly,using the experience of developed countries and areas for reference,as well as considering special situation of China,this paper classifies consumersaccording to income,employment status and expenditure,calculates the expenditure shares of each groups and compiles multi-level CPI.Finally,the empirical results are analyzed and summarized.The distinct consumer price indexes of different groups demonstrate that multi-level CPI is rational and necessary.Besides,the multi-level CPI proved to be effective by satisfaction survey.The remarkably conclusions are drawn as follows: 1)Public perception of the current CPI is heterogeneous and biased.Analytic Hierarchy Process(AHP)measures the expenditure shares from the perspective of consumers’ psychological feelings.The results show that medical expenditure and education expenditure shares may have been underestimated;2)The comprehensive CPI only reflects the price changes of middle income level of urban and rural residents,while greatly underestimates the impact on the lower income level;3)The multi-level CPI based on employment status shows that the unemployed suffer more from inflation.4)Compared with the consumers’ real feeling of price change,the consumer price index compiled by classifying the rural residents into five groups according to income is of the highest degree of satisfaction.The significance of this paper lies in: firstly,using Analytic Hierarchy Process to calculate the expenditure shares from the perspective of residents’ psychological feeling,which provides a new method for weight calculation;secondly,the preparation of multi-level CPI reflects that inflation has different effects on different groups.As a complement to the existing CPI system,multi-level CPI enriches the theory of price index system and enhances the effectiveness of macroeconomic policies.