Abstract：The paper draws the conclusion that the consumption price index is sensitive to its own shock and the lagged capital investment shock,but insensitive to the change of currency supply increase rate.On the basis of establishing VAR model of China consumption price index,currency supply increase and capital investment increase by means of researching on pulse response function and its variance.On the other hand,the paper concludes a transmitting mechanism from foodstuff cultivation area decrease to consumption price index increase and a transmitting mechanism of one emergency change of currency supply increase unpredictable to public leading to same tendency change of consumption price index.In the end the paper proposes the relative policy suggestion: policy should be stable basically;strengthening the supervision on land exploiting and developing to restrict the decrease of agriculture land;tuning currency supply by agile utilizing of ulterior currency policy;reinforcing the management on government investment,especially on local government investment,reducing the irrational factors in capital investment.
