Abstract:This paper analyzes the fixed assets investment and price fluctuation of Hubei Province since the reform and opening up 30 years ago, and verifies the relationship between the fixed assets investment and the CPI long- term equilibrium by using the method of co- integration analysis and granger causality test and econometric analysis. The result shows that the investment in fixed assets is the CPI one- way granger reason. This paper has also established the error correction model of fixed assets investment and CPI, and put forward some political suggestions on how to prevent fixed assets investment inflation. These suggestions include: firstly, in order to effectively control the investment scale and reasonably allocate resources, measure of “double track control” must be implemented;secondly, it is necessary to establish information sharing platform, and perfect the economic operation system so as to keep the balance of supply and demand for investment, and timely control and guide investment; finally, Chinese government should guide shifts in economic growth mode from leading- oriented investment and export- orientation toward expanding domestic consumption.