Construction of China’s nominal energy condition index

Purpose The paper aims to know about energy condition’s impacts on inflation comprehensively. Design/methodology/approach This paper constructs China’s energy condition index (ECI) by bringing in three variables (China’s energy price, consumption and production) based on the financial condition index. Findings The result of empirical analysis shows that the index can predict China’s inflation well. Originality/value China’s ECI can predict China’s inflation well.