How Has the COVID-19 Pandemic Impacted the Consumer Price Index? Evidence from China

This paper provides empirical insight into the impact of the COVID-19 pandemic on the consumer price index (CPI) using a difference-in-difference approach. Using monthly panel data for eight CPI categories for China and considering two specifications (i.e., the average effect and month-by-month effect), we reveal that the pandemic had a persistent negative impact on housing and daily consumables, whereas no evidence was found for a strong effect on health care. Regarding education, culture, and recreation, the pandemic mainly had a persistent positive effect over the initial months of the pandemic and then a negative effect for several months. In addition, the pandemic could have a positive effect on food, tobacco, and liquor, while it may have a persistent negative impact on clothing, transport, and communications. Furthermore, there could be a positive effect, which has increased slightly since the pandemic outbreak, on other articles and services.