Is Chinese inflation still too smooth? New evidence from Engel curves

摘要

Official inflation statistics in transitional economies often suffer from measurement biases. This paper extends the Nakamura-Steinsson-Liu Pooled Engel Curve Methodology to estimate bias-adjusted annual inflation rates in China up to 2024. To overcome the 2013–2015 household survey reform, we derive the subcategory equation’s dependent variable as the logarithm of quantity, splicing estimates into one bias-adjusted inflation series (1996–2024). The results reveal China is still smoothing its CPI inflation reality. Furthermore, we find the inflation dynamics pattern has shifted away from the hog cycle since the COVID-19 pandemic.