CSO inflation calculations ‘correct but misleading’

THE Central Statistics Office must change its current methods for calculating inflation in order to bring it in conformity with the international standards for national statistics so that people can easily understand, Patriots for Economic Progress president Sean Tembo has said. Mr Tembo said for as long as CSO does not change its method of calculating inflation, these ‘‘cyclical’’ fluctuations in inflation would continue to take place every year in the same months of September, October and November, alternating between jumps and lows. He said the International Standards for National Statistics (ISNS) required that monthly inflation be calculated using the immediately preceding month as the base, quarterly and annual inflation as the respective averages. Mr Tembo said most people were wondering how the inflation rate had dropped from 18.9 percent in September to 12.5 percent in October at a time when prices of most commodities such as fuel and foodstuffs had significantly gone up. “The CSO attributed this drop in inflation to ‘base effects’ without providing any further coherent explanation. Well, when we vouched the figures, we have found that this drop in inflation is apparently genuine, and this has something to do with the manner in which our month-on-month inflation is calculated, which we have always condemned to be a wrong and misleading approach,” he said. Mr Tembo stated that the ‘‘improper and wrongful way’’ of calculating inflation has wreaked havoc on the country’s economy the proportion of which could only be comparable to the mismanagement. He said the drop in inflation does not reflect the current situation because the essential commodities had remained high, saying that was reason why it needed explanation to make it clear to the people of Zambia. “If we get back, our Kwacha melted on that fateful Monday morning on 14th September 2015 when it jumped from about K7.6 to around K13.0 per USD, and sent inflation spiraling with it, of course some of the inflation kicked in immediately, in the month of September 2015 and some crept in gradually around October and November 2015. That means when we reach the months of September, October and November 2016, inflation is bound to drop significantly,” he explained. ‘‘Now with this wrong method being used by CSO: there will be a similar “cyclical fluctuation” next year in the months of September, October and November, if not checked, only that next year it will not be a sudden drop in monthly inflation, but rather a sudden jump,” Mr Tembo said.