The President’s economic advisor, Dr. Nii Moi Thompson has sought to discredit former deputy governor of the Bank of Ghana (BoG), Dr. Mahamudu Bawumia’s analysis that the central bank and the Ghana Statistical Service (GSS) “cooked up forex and inflation rates.”
Responding to Dr. Bawumia on his Facebook wall, Dr. Nii Moi Thompson expressed shock at Dr. Bawumia’s “gratuitous attack on institutions whose data he used in the past and which he continues to use, indeed, in the case of the central bank, he helped generate those statistics.”
Commenting on the cedi’s rate of depreciation, the economic advisor to the President admitted the gravity of the depreciation and said “even a 10 percent depreciation is too high and must be cause for worry – and it is.”
He however said it is no excuse for people to take liberties with “facts and reasoning” and confuse a generally unsuspecting public.
He continued to say that in the example cited by Dr. Bawumia, “we seem to have a case of crossed-wire analysis and its associated faulty conclusions. Dr. Bawumia in his analysis said that at the end of December 2013 the cedi was GHC2.2 per US dollar. He added that the Cedi is averaging some GHC 3.8 on the interbank and forex bureau markets and that this represents a depreciation of over 40%.”
In response, Dr. Nii Moi Thompson said the GHC 2.2 is the central bank’s reported interbank rate, whose integrity he [Dr. Bawumia] doubts, while the “averaging” of the interbank and bureau rates are Dr. Bawumia’s own concoction.
He said the 40% depreciation the former deputy governor quoted is as a result of “erroneous” reports from some media houses.
Dr. Bawumia in his release also referred to the Makola market in Accra and other markets in Kumasi, Akatsi, Techiman, Cape Coast, Wa, Bunkpurugu, or Bolga markets and said Ghanaians would laugh at any one who claim that the average prices of food and non-food items have only gone up by an average of only 1.5% this year, according to Ghana Statistical Service.
Dr. Nii Moi Thompson described as worrying, the “good doc’s” nomination of some markets with no obvious logical basis and suggested that observed prices in these markets somehow trump the validity of the inflation figures provided by the GSS.
“Of course, anybody can come up with their own wishful list of markets, which would then lead to a lot of confusion, hence the need for a commonly agreed metric – the CPI,” he said.
Tackling the core issue raised by Dr. Bawumia, he said last year, when the GSS rebased the Consumer Price Index (CPI), which is used to calculate the rate of consumer inflation, they reported instances where the new index actually showed a higher inflation than the old index did.
Hence, the May 2013 inflation rate based on the new CPI, for example, was 11.1%, instead of the 10.9% that would have been recorded under the old CPI.
The inflation rate has consistently risen since then, reaching 15.3% in July 2014.
Cementing his argument, Nii Moi Thompson said the professional definition of inflation as the general increases in prices, and not necessarily individual prices in some haphazardly chosen markets, is obviously not without basis.
“In the case of Dr. Bawumia, he derives an ‘average of only 1.5%’ inflation from GSS figures for 2014, but the CPI available at the GSS’s website does not support that conclusion.”
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