China Lowers Weighting Of Surging Food Prices In CPI

Tyler Durden's picture

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.

h/t LDT

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FOC 1183's picture

Who knew (ZH readers notwithstanding)

Thomas's picture

They've now caught the US.

MarketTruth's picture

"In honor of this massive overfulfillment of the ninth three-year plan... it's been announced that chocolate ration is to be increased to 20 grams per week!" -- 1984 Movie 

(Hint for those who never saw the movie: It was 30 grams a week before the announcement.)

Dr. Sandi's picture

I'm waiting for the book to come out.

Duck's picture

U.S. Food and beverage weighting is 14.8% NOT the 7.8% claimed in ZH post the other day.  7.8% is for food consumed at home; Americans like to eat out.  ZH should expose manipulative data claims in any direction, not just ones that support the local narrative.  Credibility.

mynhair's picture

That bad, huh?

Racer's picture

Crowds and Power by Elias Canetti (http://www.kirjasto.sci.fi/ecanetti.htm)

 

and it is old news

THE CROWD

A STUDY OF THE POPULAR MIND

 

http://etext.virginia.edu/etcbin/toccer-new2?id=BonCrow.sgm&images=image...

 

 

 

alien-IQ's picture

and the ponzi goes full retard.

Weimar Ben Bernanke's picture

MMMM plastic rice is the shit.

mynhair's picture

but rubber pancakes are the cat's meow!

Crap, rubber is way up, too.

Crap, free State rubbers are gonna cost more.

Crap, my taxes are still going up.

Crap, they still make Lexan.

jtmo3's picture

Score another one for the turd in the Treasury. He's shown the Chinese the way. Give them our country and then our ethics. And I thought the Chinese were smarter than that.

mynhair's picture

Oooh, a slight misuse of 'Turd'.  Ferg is in the Treas scoping out gold holdings.

Bob's picture

Holy Shit, good call!  Inside info????

mynhair's picture

Just another ZH miracle.  Haven't seen a miss in 18 months.

Bob's picture

Yeah, but that was, what, a 24 hour turnaround?  That's eerie.

b_thunder's picture

Nothing new here.  For decades the Chinese have been copying western "inventions."

So now they've simply copied the US Bureau of Labor Statistics' (BLS)  way of  "fixing" the CPI:  Weighting. 

On deck:  hedonics and substitution.

 

 

 

Fred Hayek's picture

Hedonics.

Because a suit bought in 2011 has 20% more features and value than a suit bought in 2010 and so its higher price should be knocked down to reflect that.

 

 

 

 

 

 (and to hide inflation)

Dapper Dan's picture

Fred, Crash Course by Chris Martenson?  If not see link for more eye opening info.

http://www.chrismartenson.com/

 

 

cougar_w's picture

And ... PROBLEM SOLVED!

What was I worried about? Damn they really are the smartests guys in the room. Massive bonuses and Bang Dae-Ho all around.

Fred Hayek's picture

Only a corrupt totalitarian country would intentionally understate the pricing of such a basic item as food in its official statis-

What?

Oh.

Never mind.

mynhair's picture

O/T, but I am all in favor of taxing your offspring, and theirs, for my benefit now.

If you were stupid enough to have kids, that is.

Never voted a Dim in my life.  Name one that was worth a crap.

There actually is one, but you numbnuts will never get it.  And I never voted for him.

Really need a Fight Club thread daily.

perchprism's picture

 

That's easy---Zell Miller.

UncleFester's picture

Bring back the duel!  Buy, buy, buy TFD...no wait, Zell, Zell, Zell!

dark pools of soros's picture

but if everyone lies.. isn't that the new truth??

mynhair's picture

Works for CNBS, I guess.  They are still on cable.

UncleFester's picture

I think you are ready for a Ministry of Truth promotion.

jmc8888's picture

I wonder how many 'news' outlets will not notice the change in methodology and just report whatever number appears. 

Those that do, will of course downplay it and compare it to our fucked up underweighting and probably call it, modernizing. 

Yes because their's is different and less rigged against reporting inflation than ours, it is not accurate.  Because they are aligning more along the lines of the world standard, this is good for the markets. 

Expect this sort of bullshit to be spouted by the talking heads, again if they don't completetly miss the boat about the methodology change.

Thanks ZH for once again setting the standard that the others, even with added time, will still fail to approach.

mynhair's picture

'news outlet'

There goes the keyboard again, if a '1' is missing later, no worries.

steve from virginia's picture

The Chinese have been cooking their books since they invented books.

What's with the GDP numbers?

Misean's picture

When food costs more people eat less. As they eat less they loose weight and even lesser. So, it makes sense that food is weighted less as it goes up in price. And the food packages weigh less too. Man, this ebbublegnomics stuff is easy.

cougar_w's picture

When food costs more people eat each other. It's a self-limiting problem, not worthy of serious discussion by people with more important things to ponder like derivative pricing and forex crosses.

mynhair's picture

but we are felines, and hence allowed to eat humans.  You are federally protected!

Misean's picture

Fewer people chasing an increasing number of corpses is deflationary!

mynhair's picture

Soylent Green has an input loss amount, don't ferget.

Misean's picture

No, that's an increasing number of corpses chasing a number of screaming humans, which is inflationary. But zombies are brain dead, so they believe the BlS numbers.

London Banker's picture

Excellent Michael Pettis piece up that suggests that depressed consumption as a share of the Chinese economy, along with decades of bank excess and malinvestment, could mean a long Japanese-style correction as the Chinese economy rebalances.

http://www.foreignpolicy.com/articles/2010/08/19/china_s_japanese_future...

Especially given what's happened in Egypt, the Chinese elites are going to be hard squeezed to maintain their subsidies at the cost of wage growth.

BlackSea's picture

A communist economy never rebalances orderly - it implodes and is triggers major revolts.

hardcleareye's picture

Thanks for the link I enjoy reading Pettis' work.

NOTW777's picture

battle of manipulators

who s the biggest liar

55mph's picture

I love this story.  Do you think US news correspondents will draw any paralells?   

mynhair's picture

No.  And you and I are cut off.

mynhair's picture

Why don't you people rate the articles?  3 votes.

farragut's picture

For what it's worth, this move was mentioned in an Aussie journal in April 2010 (1st link) and mentioned in the WSJ in Sept 2010 (2nd link):

http://www.businessspectator.com.au/bs.nsf/Article/China-to-raise-reside...

http://online.wsj.com/article/SB1000142405274870394650457546909237962528...

vas deferens's picture

Fried pussy cat with egg roll, rice and a salty tea bag up 7% this year.  

Hephasteus's picture

Data massage with an unhappy ending?

Lapri's picture

And big, 20lb bags of rice disappeared from Safeway....

NOPOMO's picture

Ben better get his finger off the print button before someone puts their finger on the nuke button.