Doubt as to the veracity of these figures has actually persisted since last September when the national statistician re-engineered the weightings of the various components of the Consumer Price Index (CPI) and changed the methodology of calculating inflation from arithmetic to geometric formula.
By a stroke of the pen that was the official launch of the new methodology, the rate of inflation fell from a high of 17 per cent in September last year to about five per cent.
The KNBS has maintained the official line that its processes and standards are in tune with the international practices.
But that alone will never take away the glaring realities that consumers confront in the retail shops on a daily basis.
These doubts gain credence when the official figures are so glaringly incongruent with what everyone’s experience has been in any given month of the year and the KNBS’ explanation of the changes.
Take last month for instance. The reality is such that petroleum and kerosene prices went up by an average of Sh5, electricity prices rose on account of upward adjustment of the fuel cost segment of the monthly bills, prices of wheat products were up, one litre of milk now costs Sh6 more than it did at the end of July.
But the official figures released on Thursday show that inflation was down by a margin of 0.4 per cent to 3.6 per cent on account of the recent cuts in mobile phone tariffs and a drop in the price of maize.
From a lay person’s viewpoint people would need to meet basic needs first before going for secondary ones such as buying airtime – hence energy or milk would have more weighting.
The frequency at which these items are bought would also matter.
An average consumer would probably buy airtime twice or three times a week, but has to spend on basics such as energy, milk and bread daily.
Going by the latest inflation data, significant changes in the prices of five key consumer goods can be completely neutralised by a three shilling drop in mobile phone airtime and an equally marginal drop in the price of maize is rightly raising eyebrows among consumers of the data.
It must be stated here that doubts over the authenticity of inflation figures are not unique to Kenya.
The more fundamental question is the fact that crafters of the new CPI index have contrary to the global practice completely blurred the distinction between headline and underlying inflation that reflects the performance of monetary policy.
In an environment like ours where monetary policy is increasingly being ignored by private sector players and targeted at facilitating government borrowing, phasing this figure out has only eased pressure of probity from the Central Bank of Kenya – an advantage that its peers elsewhere do not enjoy.
It may be irritating that these questions continue to arise nearly a year after the new inflation figures were introduced, but the KNBS must know that this is a subject whose examination can only intensify especially under the new constitutional dispensation in which citizens have been granted the right to know.
quite an interesting read.
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