INFLATION FIGURES DONT ADD UP
The latest inflation figures released my KNBS yesterday do not make sense .
Inflation for January is 8.351 *in house data* while KNBS says it is 7.78 (as compared to compared to 8.01 in December).
The rise in Food & Non-Alcoholic Beverages and Alcoholic Beverages, Tobacco & Narcotics basket is in tandem with forecasts .
The Transport Index figures of -0.94 per cent in Jan VS Dec 'due to reduced cost of petrol and diesel' is largely inaccurate.
The drop in pump prices was insignificant to warrant any changes in the CPI btn Dec and Jan save for kerosene--used for cooking.
In addition, exercise tax that came into effect in Dec had an overall impact of an increase in cost of goods not a drop prices.
Because we use inflation figures to benchmark econ targets, it is possible that macro fundamentals are not representative of what is on the ground.
KNBS figures, while indicative of general economic trends, often fall short of the level of accuracy required of the institution.
Issues of accuracy aside, the elephant in the room is why is inflation rising 6 months after initiating a tight monetary policy?
A tight monetary policy should do two things one-stabilize forex volatility, which it has so far done and two--tame inflation. Stubbornly inflation continues to rise. Something is NOT adding up
Inflation for January is 8.351 *in house data* while KNBS says it is 7.78 (as compared to compared to 8.01 in December).
The rise in Food & Non-Alcoholic Beverages and Alcoholic Beverages, Tobacco & Narcotics basket is in tandem with forecasts .
The Transport Index figures of -0.94 per cent in Jan VS Dec 'due to reduced cost of petrol and diesel' is largely inaccurate.
The drop in pump prices was insignificant to warrant any changes in the CPI btn Dec and Jan save for kerosene--used for cooking.
In addition, exercise tax that came into effect in Dec had an overall impact of an increase in cost of goods not a drop prices.
Because we use inflation figures to benchmark econ targets, it is possible that macro fundamentals are not representative of what is on the ground.
KNBS figures, while indicative of general economic trends, often fall short of the level of accuracy required of the institution.
Issues of accuracy aside, the elephant in the room is why is inflation rising 6 months after initiating a tight monetary policy?
A tight monetary policy should do two things one-stabilize forex volatility, which it has so far done and two--tame inflation. Stubbornly inflation continues to rise. Something is NOT adding up
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