China's statistical method for calculating the consumer price index (CPI) is accurate, the National Bureau of Statistics said over the weekend in response to recent claims that it is underestimated.

The statistics bureau announced earlier this month that the growth of CPI, a major inflationary barometer, slowed from 1.5 percent in June to a mere 1 percent last month.

During the January to July period China's CPI grew 1.2 percent year-on-year, also at a relatively low level.

However, many Chinese consumers believe prices have risen in areas like medical services, education, petrol and housing in recent months.

"The CPI announced by the National Bureau of Statistics is a general reflection of average price changes for all kinds of products and services across the country," the bureau said in a statement.

"Therefore, individuals may have different feelings towards price changes."

It cited petrol price increases as an example.

China raised the price of petrol by 10.6 percent in May, adding to many car owners' costs in cities, but having a limited impact on the CPI.

This is because a large proportion of Chinese consumers without cars did not see a substantial increase in their transport costs as fees for daily public transport like buses and trains did not change.

According to the statistics bureau, China's CPI is compiled in line with international practice.

The bureau has nearly 3,000 price investigators collecting the prices of products and services once every five days across the country.

The current CPI calculation system includes sectors such as food, clothing, household facilities and services, medical services, transportation, telecommunications and housing.

The bureau said the weight of each sector is determined through a consumption expenditure survey of 120,000 households from both urban and rural areas.

The bureau also makes small changes every year and a major adjustment every five years in accordance with the country's changing consumption structure.

For example, housing-related costs including construction, decoration, rent and utilities, account for 13.2 percent of the CPI, up from 9.7 percent in 2000.

But in response to claims that the CPI would have been higher had it included property prices which are rising much faster than the CPI the bureau said they are not and would not be included in the CPI calculation.

House prices in 70 major Chinese cities rose 5.7 percent in July compared with a year earlier, according to National Development and Reform Commission statistics.

"From the statistical viewpoint, more people are buying houses to transfer their current assets into fixed assets, and thus property purchases usually fall into the category of investment rather than consumption," it said.

In addition, the purchase of property is not synchronized with consumption as it is a one-time expenditure.

"It is more rational to use rent and virtual rent money that house owners may need to pay if they rent a house in a certain period to reflect housing costs," the bureau said.

But the bureau conceded the CPI calculation, including its statistical method, still needs further improvement to better reflect daily consumption expenditure and the impact of price changes on different groups of consumers.

(China Daily August 29, 2006)