No need comparing official inflation figures to that of Prof Hanke - GSS explains

Government Statistician, Prof Samuel Kobina Annim has cautioned Ghanaians against comparing the Statistical Services inflationary figures with that of popular US Professor Steve Hanke. Prof. Steve Hanke via social media sensation on his verdict of many economies has often accused the government of understating the country’s true inflation rate. However, Prof Annim addressing the media at the October briefing on the nation’s inflation insists the CPI method adopted by the Statistical Service is consistent with international practice and superior to Prof Hanke’s Purchasing Price Parity Module (PPPM). Prof. Annim added that Mr. Hanke’s PPPM is only based on the exchange rate. “Steve Hanke’s approach is not based on consumer price index, Steve Hanke’s approach is based on the purchasing power parity,” he reiterated. “Underlying the purchasing power parity is the assumption that price differences between two countries is only the exchange rate. “The key difference here is that the CPI approach necessarily requires that you collect data on three variables: prices, quantities and the expenditure weight of these items, and this is at sharp variance with Steve Hanke’s purchasing power parity,” Prof. Annim explained. “The premise of the computation both from a data point of view and a scope of data point of view are not the same, so we need not make an attempt to compare that,” he cautioned. According to him, Steve Hanke’s approach does not put into consideration the importance of items that people consume. He also revealed that the Statistical Service will stick to the CPI method as it remains the true reflection of inflation.

Government Statistician, Prof Samuel Kobina Annim has cautioned Ghanaians against comparing the Statistical Services inflationary figures with that of popular US Professor Steve Hanke. Prof. Steve Hanke via social media sensation on his verdict of many economies has often accused the government of understating the country’s true inflation rate. However, Prof Annim addressing the media at the October briefing on the nation’s inflation insists the CPI method adopted by the Statistical Service is consistent with international practice and superior to Prof Hanke’s Purchasing Price Parity Module (PPPM). Prof. Annim added that Mr. Hanke’s PPPM is only based on the exchange rate. “Steve Hanke’s approach is not based on consumer price index, Steve Hanke’s approach is based on the purchasing power parity,” he reiterated. “Underlying the purchasing power parity is the assumption that price differences between two countries is only the exchange rate. “The key difference here is that the CPI approach necessarily requires that you collect data on three variables: prices, quantities and the expenditure weight of these items, and this is at sharp variance with Steve Hanke’s purchasing power parity,” Prof. Annim explained. “The premise of the computation both from a data point of view and a scope of data point of view are not the same, so we need not make an attempt to compare that,” he cautioned. According to him, Steve Hanke’s approach does not put into consideration the importance of items that people consume. He also revealed that the Statistical Service will stick to the CPI method as it remains the true reflection of inflation.