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Abstract CPI and PPI are two main criteria to judge the price level and macroeconomic trend. There is no consistent conclusion about the debate on the conduction direction of CPI and PPI. The monthly series of PPI and CPI were used to analyze the conduction effect and action duration based on Autoregressive integrated moving average-X （ARIMAX）model, supplemented by Granger causality test. The results showed that there was a two-way lagging conduction between PPI and CPI in China; The influence of PPI was transmitted to CPI after 1 month, and the influence of CPI was transmitted to PPI after 2 months; The effect duration of PPI on CPI was short and lasted for 2 months, and the effect duration of CPI on PPI lasted for a long period. Therefore, we should adjust from both monetary and fiscal policies, establish a price index monitoring system, and promote supply-side structural reform, so as to reduce price fluctuations and promote the smooth operation of the economy.
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Received: 10 January 2022
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2021, Vol. 34 
