WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2008-07-17 Time: 07:00:06 Posted By: Jan
By Gershwin Wanneburg and Lindsay Dentlinger
Inflation could be much lower than current official estimates, meaning that the Reserve Bank may have been too hasty in raising interest rates by so much over the past two years, according to Investec, the country’s biggest private investment bank.
If Investec is right, it would not be the first time Statistics South Africa has got it wrong. In 2003 it uncovered flaws in Stats SA’s inflation numbers, which triggered a hurried downward revision of the figures and eventually led to a few years of spending bliss for consumers after the Reserve Bank lowered interest rates accordingly.
However, other economists say, without knowing their method, it is difficult to tell whether Investec is right this time, too.
| ‘It is absolutely not possible to calculate an accurate CPI before 2009’ |
But if they are, it could once again have far reaching implications.
CPIX inflation reached a new five-and-a-half-year high of 10,9 percent in May, but Investec says it would have been 8,7 percent if Stats SA had adjusted its methods for tallying inflation last year, as per international norm.
As a rule, countries adjust their inflation baskets every five years. Therefore, Stats SA should have done so again last year, instead of this year as it recently announced, Investec said on Tuesday.
“In the normal course of events, Stats SA would have implemented the reweighting and rebasing in 2007, but, it seems, they were so intent on improving their methodology, that the reweighting and rebasing will only come into effect in January next year,” said Investec head of fixed income Andre Roux.
“In their efforts to ensure that the reweighting and rebasing stood up to international standards, they lost sight of the impact that these delays would have. The country has been labouring under the illusion that inflation is much higher than the true number,” Roux said.
| ‘All I’m saying is: you can’t wait until next year to tell us the real number.’ |
But Stats SA has defended the delay, saying it was carrying out more extensive and robust surveys such as the income and household expenditure survey, which would provide it with year-on-year information, rather than month-to-month.
Said Stats SA executive manager for CPI Patrick Kelly today: “Yes it is later than it historically would have been, but we are making a lot of improvements to the reweighting and general CPI improvements in terms of the baskets and methodology.”
Kelly said he did not disagree with Investec claims that inflation could come down when the new figures are published in January if the rate of price change is the same as it is now.
He said the large role the price of food played in determining CPI was having a major impact on the current inflation figure.
Kelly said Stats SA was collecting the prices of more than 100 000 items each month in efforts to improve its CPI calculation.
“It is absolutely not possible to calculate an accurate CPI before 2009,” said Kelly.
Stats SA said recently it would assign different weightings to certain goods it uses to calculate inflation, but the new method will only take effect next year.
If Stats SA has been missing the mark, it could affect everything from wage negotiations to retail prices, Roux said.
“All I’m saying is: you can’t wait until next year to tell us the real number.
“Tell us now and please make sure you tell us before the Monetary Policy Committee meeting in August, before the governor and the committee decide whether to hike rates more or whether to cut rates,” Roux said.