Inflation Rate - 'a cooked figure'?

The minority spokesman on Finance and Economic Planning, Hon. Moses Asaga, has challenged the credibility of the single digit inflationary figure of 9.9%, announced by the minister of Finance and Economic Planning on Thursday in Accra, labeling it, 'a cooked figure'.

In an interview with the Business Chronicle after the announcement of the inflation rate, the former deputy minister said he based his conclusion on the precedents set by the President, when he announced a per capita income of $600, of which he had to withdraw because there were no statistics to support it.


He also believed that the economy could not have registered a single digit inflationary figure just after fuel price increases from 32,000 to 35,000, although the increment was small.


He said the fuel prices further increased prices of goods and services, including transport fares, and therefore it does not make any economic sense for inflation to reduce from 13% to 12.1% and to 9.9%.


He said until the government show where that number came from, he and other economists would say the 'figure is a cooked one'.


The Minority spokesman said the rate does not reflect what is happening on the ground as unemployment rate is still on the ascendancy. "If it has reduced, so what? Has it affected the high unemployment rate in the country?" He asked.

He therefore called on the government to disclose the source of the reduction in the inflation rate. "If you look at inflation, it is a measure of basket of items; but it did not tell us which aspect of the items dampened inflation."


He said other economists should have corroborated the figure, but they did not. "There should be some consultation and consensus-building. It is meaningless to us because it does not reflect the state of the economy."


He also said the banking system does not believe in the single digit inflation too because the spread between the lending and borrowing rates is still the same.


"As the inflation and prime rate go down, interest rate and the lending rate should have come down; but they are not, because players in the economy do not believe in them.


How can inflation be moving downward while unemployment is widening?" he asked.

Moses Asaga further said the inflation rate would be a double-digit inflation rate when it is rounded up. "It is closer to 10% than to 9%; so this can't be single digit", he added.


Later, on an Accra-based radio station, Citi FM, the deputy minister of finance and economic planning, Dr. Anthony Osei, agreed with Dr. Nii Moi Thompson, an economist, that the inflation rate of 9.9% is not single digit because it is closer to 10% than to 9%.


He however said it is worth mentioning, as this will help businesspersons to plan ahead. He said with inflation nose-diving, other macro economic indicators would follow suit, especially interest rates.