Category: Business & Economics Created on Thursday, 10 May 2012 08:59 Published Date Written by GNA Hits: 274
Accra, May 09, GNA - The Ghana Statistical Service (GSS) on Wednesday said the statistics that it compiled are not influenced by any group or individual and are made to available to users on an impartial basis.
In a reaction to the lecture on the ‘State of Our Economy,’ delivered by Dr Mahamudu Bawumia, the GSS said the same principles and procedures that had been used to compute inflation rates in the past continue to be used now.
“We would like to remind him that it is the same institution that computed the GDP figures he used to judge the good performance of the economy between 2000 and 2008. It is also the same GSS that computed the GDP figures that showed the declining growth in Agriculture in 2011, which he referred to in his speech,” Dr Philomena Nyarko told journalists at a briefing in Accra.
“GSS has always subscribed to internationally accepted principles and ethics in the production of quality statistics,” she said.
Dr Nyarko described as unfortunate the example given by Dr Bawumia to support his assertion that the single digit inflation was ‘not consistent with the economic fundamentals and development in some key indicators.’
She said it was well known that ‘correlation between variables does not necessarily imply causation.’
Besides, computing price changes over a time interval is not consistent with the standard procedure for calculating inflation and is misleading, Dr Nyarko said.
She explained that the Consumer Price Index on which the calculation of inflation is derived is a weighted average of the price changes of 242 commodities, which are collected from 40 markets across the country.
Secondly, price reading is done two times a month to calculate monthly price averages for the computation of the CPI.
Dr Nyarko said it would therefore be wrong for one to use only few items in few selected locations as an indicator of the change in the general price level.
“The computation done by Dr Bawumia is more of a cumulative price change and not inflation. The standard approach for computing headline inflation is to calculate the change between the index for a particular month in the current year and that of the same month in the previous year,” she said.
Dr Nyarko said it was unacceptable for one to compute the cumulative price change between December 2008 and April 2012 and compare it to the year-on-year inflation rate.
The acting Government Statistician also questioned the link drawn between the price of cement and inflation, noting that cement is not in the consumer basket but its influence on the CPI could be felt through rent which is in the basket.
Again, in computing the CPI, the relative importance (weights) of the items in the consumer basket is very crucial and therefore taking the prices of few commodities to generalize inflation without accounting for their weights in the consumer basket is inaccurate.
On the issue of single digit inflation and the declining growth in crop production, Dr Nyarko said the lower inflation rates did not mean that prices were not rising, adding that, the effect of the depreciation of the cedi is reflected in the inflation rate of imported food items.
Available, data indicates that imported food inflation has been consistently higher than local food inflation, she said.
In March 2012, for example, the figures were 9.0 percent for imported food inflation and 3.7 percent for local food inflation. However, only 16 out of the 81 items in the food subgroup are imported, indicating that the high price of imported food items would have very little effect on inflation.
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