Abstract: Since 2000, China′s monetary policy has been constantly adjusted according to the economic situation, maintaining the basic stability of prices, but residents′ price perception is obviously different from the actual increase of CPI. Based on the questionnaire survey results of the People′s Bank of China in 340 cities nationwide and ICPS, CPI, M2Q time series data, this study empirically investigates the relationship between CPI and the residents′ price perception by using VAR impulse analysis method and others. The research shows that there is a certain degree of deviation between CPI and the residents′ price perception in China, and compared with the changes of the money supply sequences, the deviation is significant. Due to the limitations of CPI itself and price control, CPI is not the best indicator to measure inflation in China, which may weaken the early-warning of macro-economy; whether it is the adjustment of the current CPI system or the establishment of an effective indicator system to measure inflation, the residents′ price perception factor should be emphasized.

Key words: price perception, price index, ICPS;inflation