Behind the numbers
WHEN it comes to the cost of living in Pakistan, personal experiences and government statistics don’t match up. Having finally dipped below double digits in July, according to the official numbers, inflation has been declining ever since and fell to 8.8 per cent in September. This would be good news if consumers and businesses weren’t continuing to feel the pinch of rising prices and having trouble making ends meet. It’s true that the government isn’t claiming inflation is zero per cent or that prices are declining — in other words, official statisticians concede that prices are still going up, but argue that they’re not going up as fast as they used to. The trouble is, though, that questions are being raised about the methodology used to calculate the number. The base year for comparison, for example, has been changed to 2007-2008, when prices were higher than in the previously used base year (2001-2002). The basket of goods on which the calculation is based has also been changed, raising questions about how representative it is of consumer experience.
There are a couple of things the Bureau of Statistics can do to address suspicions that the calculation has been manipulated to show inflation lower than it actually is. For one, it can continue to publish results based on the old method alongside the numbers it publishes now. It can also produce one consolidated report laying out what changes have been made to the calculation method, and on what dates. The new method will continue to produce lower numbers, but being transparent about changes should help address concerns that inflation statistics are being manipulated in time for elections or to bring down interest rates in order to lower the cost of the government’s heavy borrowing. The question is not whether inflation has come down — it undoubtedly has from the early days of this government’s tenure, partly because of the fall in international commodity prices. The question is how much it has come down. More transparency is needed before policymakers get complacent about the below-10-per-cent number or the public loses all faith in this official statistic.