Abstract: Inflation is one of the most important macroeconomic variables, and The CPI is the most widely used measure of inflation. Over the past two years, the significant adjustments in the real estate market have been one of the most important changes in China's macroeconomy. Against this backdrop, the changes in China's CPI have been relatively stable. In stark contrast, the United States has seen its recent inflation resilience repeatedly exceed market and Federal Reserve expectations due to the strong housing consumption prices.
Based on the above observations, the natural question is: if China's CPI has similar characteristics to the US CPI statistics and considers more housing-related factors in CPI calculation, what form will the observed price trends take?
This article attempts to re-estimate the weight of housing-related expenditures and their price changes in CPI accounting from the perspective of opportunity cost. After the reassessment, housing expenditures replace food expenditures as the largest part of the CPI accounting weight, and the correlation between the price changes of housing expenditures and house prices significantly increases. The consumer price level calculated on this basis reflects more information on changes in the real estate market and has different macroeconomic and policy implications. Against the backdrop of a major adjustment in the real estate market in our country, the above attempt may provide a supplementary perspective for observing the economic situation.
