Monday, February 14, 2011

Surging Food Inflation? No Problem, Says China, We'll Just Change the CPI Weighting

And they did it one day before the release of January CPI data on Tuesday. Here you go, Ben, Timmy, and Barry. Learn from the Chinese! Dispense with the subtleties (substitutions and hedonics) and just do it.

(That what Mubarak and Ben Ali of Tunisia should have done to show the populace that there was no inflation in their respective countries.)

From Zero Hedge:

China Lowers Weighting Of Surging Food Prices In CPI

As we speculated earlier, China has just lowered the weighting of food in its CPI. The reason: the nearly 5% surge in food prices in the past 10 days. Turns out the US can still learn a thing or two about data manipulation from the Chinese...

From Dow Jones:

China has adjusted the weighting of the components making the consumer price index and lowered the weighting of food at the start of the year, the state-run China Securities Journal reported Tuesday, citing an unnamed official at the National Bureau of Statistics.

But the report quoted Xian Zude, chief statistician of the bureau, as saying that the new CPI statistical model will reflect changes in consumption and price levels more accurately, and won't result in a lower index reading.

The report came ahead of the release of January CPI data Tuesday morning. On Monday, state-run Xinhua News Agency quoted government economist Ba Shusong as saying that China's CPI for January may be lower than market expectations, without elaborating.

The median forecast in a Dow Jones Newswires survey of 12 economists was for January's CPI to have risen by 5.4% on year, up from December's 4.6% rise and November's 5.1% increase.

As a result of this pre-emptive manipulative action, expect to see a CPI lower than the 5.4% consensus when the number prints later tonight.


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