Saturday, June 24, 2017

Planning minister’s inflation count at odds with global practice: economists

  • Zafar Ahmed, Staff Correspondent bdnews24.com
    Published: 2017-05-17 01:35:11 BdST

bdnews24

Two economists have faulted Planning Minister AHM Mustafa Kamal for moving into quarterly inflation data away from the global practice of monthly figures.

One of them has gone as far as warning that it will 'create public distrust'.  

The average rate shows that consumer prices edged down to 5.28 percent in the third quarter (January-March) of this fiscal year from 5.78 percent a year ago. That may give the minister and his government a sense of comfort, but it brings troubles to others.

After a media briefing where Kamal released the quarterly data for the first time, some reporters followed the minister to his office to ask about his method and were provided with monthly data prepared by the Bangladesh Bureau of Statistics or BBS.

Traditionally, the director general of the national statistical agency had released the consumer price index or CPI, a measure that examines the weighted average of prices of a basket of consumer goods and services.

Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.

Breaking with the norm, Kamal weighed in and took the job of his subordinate by starting releasing inflation data at a regular media briefing that usually comes on Tuesdays.

Calculations show that the data the minister presented at Tuesday's presser was actually an average of three monthly figures: 5.15+5.32+5.39/3=5.28.

On a monthly basis, consumer prices rose 5.39 percent year-on-year in March, the highest in five months.    

Professor MA Taslim, who teaches economics at Dhaka University, said the method of averaging three monthly figures for inflation is at odds with the global practice.

“No country in the world follows this method.”

The vital data, if calculated in this method, will fall months behind. For example, January data will be revealed in May, if this practice continues.

“This is how it will keep us behind.”

‪Businesses usually adjust prices of products based on inflation rates, Taslim said. Getting the information five months late will certainly cause trouble.

‪Ahsan H Mansur, ExecutiveDdirector of Dhaka-based Policy Research Institute, feared far worse.

“I think the planning minister did this to hide data after noticing an upward trend.”

‪Other countries provide inflation rates online for use in research, analysis and policymaking, he said.

‪“It is one of the main economic indicators. There is no reason to fear data. Data acts as the economy’s biggest indicator.”

‪Unlike in Bangladesh, the CPI is never released by ministers in foreign countries, according to the researcher.

‪“The BBS should be allowed to operate independently. There shouldn’t be any kind of intervention in its work. Moves such as this will weaken the government and create distrust in the minds of people.”