A Study On The Driving Factors Of CPI In Beijing

This paper made a systematic analysis on the drivers of Beijing’s CPI. On the basis of descriptive statistics, data visualizing, bold assumption, careful observation and verification, we reached some practical conclusions. Firstly, according to the history and recent movements of CPI, this paper summarized and tried to explain the fluctuation characteristics, and figured out the seasonal circulation of CPI in Beijing area. Secondly, from the perspective of the Central Bank, we concluded the tools through which the Central Bank reached the goal of stable currency, and found through regression methods that CPI is related with the broad money supply M2 by a quadratic function, and would grew along with the growth of the money supply. Thirdly, from the perspective of the producer, we compared the relationship between PPI, livelihood PPI, and CPI of Beijing area. With the aid of AIC criterion using stepwise regression method, we found that it was the combination of the livelihood PPI and its 2 period lag data that determined the direction toward which the CPI would head, but it could not decide CPI totally. Last but not least, from the perspective of customers, it was analyzed that the per capita disposable income in Beijing’s impact on the CPI, is that per capita disposable income and the CPI also present a quadratic function relation. According to the customer survey reports, the expected price index is a forecast of CPI. Through the discussion of this article, you can have a systematic understanding of the CPI fluctuations in the Beijing area.