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The inflation immune magic
republic
E.
Ablorh-Odjidja
May 11, 2012
I have been surprised by many
things since I arrived in Ghana in March of 2012.
But now I am caught in a maze of confusion in
the release of the Ghana Statistical Service (GSS)
report on inflation and its message on the national
economy.
Currently, the overall inflation
rate, as widely touted by the Government, is in the
single digits and a good thing.
Keeping the inflation rate low must be a
healthy desire for any government.
In February 2012 it was 8.6.
It edged up slightly to 8.8 percent in March
2012. In April 2012 it was 9.1.
So far so good.
But reading low levels of
inflation officially stated and seeing the glaring
differences in the same economy experienced in the
streets should be a matter of concern for all, not
only the average citizen.
Are the stats stated in the
abstract, or realistically associated with matters
on the ground?
How the inflation rate in any
economy can be this low, as reported, and life
experienced within the same must raise an alarm.
No wonder the NPP's (the opposition party)
report, based on data received on request from GSS,
is raising eyebrows.
“18% of the prices from which the
GSS calculated inflation rates had been given as
zero Ghana cedis (GH¢0.00). What this means in
practice is that those items are sold for free in
the markets,” said the NPP report.
It continued: "The findings were
of “prices the Service had collected from markets
across the country which they had used for GSS’
inflation calculations, covering the first 5 months
of 2011."
In evidence, the report said, was
the single-digit rate of 8.9 percent.
But a later report on the same subject also
showed that 18% of goods and services in the
inflation bucket had zero prices.
At zero prices, one would have to
wonder the impact of the 18% cost-free part had on
the bucket.
When prices for critical food
items in key markets sell for nothing, then it is
time for some real explanations as to why living in
Ghana is so expensive.
At three markets at Kwahu Praso,
the report said, maize price was GHC 0.00.
Sefwi Bekwai had kenkey and fish selling at
the same zero price.
And flour at Koforidua was GHC 0.00.
But these are essential food items.
A very juvenal approach, if not
subterfuge, must have knocked off the actual prices
on them. But
the dishonesty ought to be apparent.
Dr. Bawumia, the presumptive VP
for the NPP opposition party, was skeptical about
the single-digit inflation rate espoused by the
current NDC government, and rightly so.
Dr. Philomena Nyarko, the Acting
Government Statistician, responded that “Dr.
Bawumia's analysis on the country's single-digit
inflation does not only undermine the current level
of inflation but also the Ghana Statistical
Service's indicators on inflation.”
Dr.
Nyarko statement provided no material
information as to why Dr. Bawumia’s approach was
flawed.
Nor did she bother to explain the zero pricings on
items found in the bucket.
The NPP, through its
representatives, went further to point out essential
items that were missing in the bucket.
Points at Kumasi, ostensibly the
largest markets after the ones in Accra, in the NDC
inflation report, showed no cost for cooking gas,
kerosene, water, petrol, and services like
electricity, intercity bus fares, standard postage
within Ghana, and telephone charges.
The missing items, according to
NPP experts, constituted about 17% of the data that
should have been in the bucket for calculating the
inflation rate nationally.
The omission might be a mystery to some.
But ultimately it produced the lower rate in
the NDC inflation report.
This underhanded reporting brings
up the question of accepted practice at the GSS.
And, it should be on how long or extensive
the method has been used for calculating inflation
for the nation, regardless of the party in power?
Any inflation rate arrived at, by
a method this flawed, cannot be useful for a nation
set on developmental goals and honestly cannot be
desirable practice for a country like Ghana.
The economy is already complex.
But regardless, it is within reason to expect
the average Ghanaian to know when the national
economy hurts.
A citizen knows instantly when
prices go up, with visits to the markets or using
our various transportation services.
He or she already buys the same goods and
services the statistics are supposed to measure.
Therefore, there is no need to undermine confidence
in what is reported.
Prices in the statical bucket
happen because of what is happening within the
Ghanaian economy.
And prices are bound to go up when our major
items and services are imported.
And hardly do we produce a majority of the
major items or services our country's development
requires.
Toothpicks to toilet rolls are
brought from abroad.
And our major and minor construction jobs are
handled by the Chinese.
We buy these items at speeds that make the
national currency very weak.
No wonder the cedi has been in a steady
decline since 2008; the second-worst performer
against the dollar.
The exchange rate for the dollar
tells the story.
In March 2012 it was 1.65 cedis.
Two months later in May 2012, the same has
gone up to 1.84.
As demand for imported goods goes up, so does
the negative impact on the local currency and the
prices to be seen in the inflation bucket.
This approach is very flawed.
An honest statistic on inflation can be a
good start.
At the root of every inflation in an
economy, as understood by all civilized nations, is
the devaluation of currencies.
It is when the purchasing power of a
particular currency shrinks.
The cedi has been shrinking since
2008.
But, incredulously, Ghanaians are asked to believe
in 2012 that they can now buy more goods and
services with less money than they did when the cedi
was relatively stronger.
It may be right for Dr. Nyarko
not to include some items in the inflation bucket.
But when a particular item like maize is
prized at zero and cement and fuel are entirely
missing in the bucket list, one must wonder why.
Cement prices turn up in rent
collections.
A rise in crude oil price will show up in
transportation costs. Thus, the price of maize in a
rising transportation cost era would have to go up.
Many understand this as elementary and
fundamental to the economy.
We can deceive ourselves with the
doctored inflation reports.
But this approach will do nothing to ameliorate
our economic conditions. To expect otherwise is a
magical occurrence that just does not happen in any
well-tuned economy.
E. Ablorh-Odjidja, Publisher www.ghanadot.com,
Washington, DC, May 11, 2012
Permission to publish:
Please feel free to publish or
reproduce, with credits, unedited.
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