Understanding China's mysterious CPI basket

Fast food, Asian style

China’s policymakers routinely use the consumer price index CPI as an important reference for deciding the country’s monetary policy, but how the index actually works is not readily transparent as the calculation behind the index has never been made public.

Given food’s heavy weighting in household expenditure and in particular the high per capita meat consumption in China, the nation’s CPI index is a “meaty pie”, estimated Rabobank International after analysing public data on food purchases.

It’s no secret that food prices take up a large portion of the CPI basket in China....