November 12, 2010 / 3:50 AM / 7 years ago

Inflation "under-statement" sparks row in China

BEIJING (Reuters) - With price pressures on the rise in China, a rare public spat has broken out in government circles about whether the statistics agency is suppressing the full truth of how high inflation really is.

Many Chinese have long harboured suspicions about the quality of official inflation data, saying that it does not adequately capture soaring property prices or food costs.

But criticism took a curious turn this week when the Chinese Academy of Social Sciences, a top government think-tank in Beijing, published a research article arguing that the consumer price index had been under-stated by more than 7 percent over the past five years.

The National Bureau of Statistics, which regularly defends the quality of its output, swung into action.

"Obviously, the article's conclusion does not hold any water," Sheng Laiyun, NBS spokesman, told reporters.

The think-tank report found a gap between historical inflation figures and those that can be calculated based on the supposed weights assigned to the various components of the consumer price basket.

The inference was that the NBS might have been massaging reported data by changing weightings without informing the public.

"While only publishing the sub-indices of eight categories but not releasing changes in basket weightings, there is an opportunity to adjust the CPI figure," wrote Xu Qiyuan, author of the report.

The NBS makes small revisions to consumer price index weightings every year and major revisions every five years.

"CPI is not undervalued and there is no way that it could be manipulated by anyone," Sheng said.

Xu, for his part, was careful to clarify that his report was based on his personal views and in no way represented the Chinese Academy of Social Sciences.

The Statistics Bureau reported on Thursday that China's consumer price inflation rose to a 25-month high of 4.4 percent in the year to October.

Analysts warn that the government could be behind the curve in tamping down on price pressures and that it will have to ratchet up the intensity of monetary tightening in the coming months.

Editing by Ken Wills

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