Taobao CPI - A Superior Index to Predict China's Economy

China's largest online consumer-to-consumer (C2C) marketplace Taobao launched "Taobao CPI"(TCPI)

, China's first consumer price index of online shopping in June 2008. Based on price trends in online shopping, Taobao CPI is designed to reflect the general ambiance of the online shopping market and the consumption status of urban mainstream citizens. Analyst in Taobaodiscover.com,a fast-growing china marketing research and marketing consulting firm, believes that TCPI is a better index to foresee the trend of Chinese economy than Chinese National CPI.

The main difference between TCPI and National CPI is: TCPI reflects the prices of smaller categories of goods and gives more weights to consumer goods (such as apparel, digital products, and cosmetics), which have high price elasticity and no rigid demand; National CPI weights more on food products, which have low price elasticity. Therefore, TCPI is more sensitive to the price change than national CPI. This means the change of TCPI is prior to the change of National CPI.

In July 2010, TCPI rose slightly at 0.1% from 6.9% in the same month of 2009. It dropped 6.8% from last month. It has been declined for 5 months from its peak at 12.9% in February this year

In Sub-sectors: compared to the same month of last year, TCPI in food/health, living service, dress/shoes/bag sub-sectors had the most significant increase. Particularly, food/health sector had the largest increase to 10.9%. In contrast, collections, household items, maternity items, 3C Digital, jewellery are showing a sharp price decline. Most of sub-sectors emerged a general trend of decline from June.

National CPI climbed 3.3% from the same month of last year and 0.4% from June. Food prices rose 6.8% from July 2009 and 1.1% from June. This is mainly due to the severe flooding weather across China. Fresh vegetable prices were up 22.3%, grains up 11.8% and meat/poultry products up 4.1%. Food sector contributed to the National CPI increase more than 75%.

Based on the comparison between TCPI and National CPI, senior analyst in Taobaodiscover.COM predicts that China's economy is cooling down as National CPI will drop either at the end of this year or early next year.

TaobaoDiscover.com team, the best talents with cross-culture background, help you to understand the dynamic of Chinese economy and provide you with the real time analysis. www.TaobaoDiscover.comhelps businesses in North America to learn TaoBao, Chinese market and consumer trends for China market entry and selling to China.

Taobao CPI - A Superior Index to Predict China's Economy

By: Tony

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