Dear Editor,
The main private newspapers must be commended for often explaining the complex reports on Guyana’s economic performance, even as credible, accurate, timely, and adequate official information on the economy remains a challenge, if not a deliberate obstacle.
The Stabroek News Editorial of 5th August, for instance, in reviewing the Bank of Guyana’s Quarterly Report & Statistical Bulletin for first quarter 2023, casts doubt on the statement “The inflation rate stood at – 0.6 percent at end of March 2023”. The editorial asks scathingly: “Are all the people who complain about price increases on food to this newspaper each week in our cost of living feature deluded?”
The people are not deluded. But one needs to understand a few things about inflation and how it is measured and presented (inadequately) by the Bureau of Statistics (BOS) and reported (sweepingly) in the Bank of Guyana (BOG) reports. Below are the considerations I keep in mind, as a non-economist who reads up on economics.
First, there is a difference between price levels and inflation rates. If the monthly inflation rate (the change in prices) drops slightly, but prices remain exorbitantly high, then that slight drop in inflation amounts to nothing in people’s minds and purses. Combatting Guyana’s embedded high prices for food and other items cannot succeed by only reducing inflation rates. Success is only possible by increasing real wages and incomes — that is, wages and incomes that compensate for high and increasing price levels. So if rent is around 50% of a typical worker’s monthly income, then small and sporadic decreases in inflation will still leave him and his family in a crisis of existence.
Second, the inflation rates used by the BOG are monthly measures produced by the BOS. The negative 0.6% rate appears to be an average for January to March 2023, an average that includes the +0.7% rate for January. Since March, monthly inflation rates (notably food prices) are climbing again.
In any case, people’s subjective estimates of price changes span various time ranges—a week, a month, since last Christmas, since the rainy season started, etc. So, what they informally report must be contextualized.
Third, the prices used to compute the official inflation rate are from markets, gas stations and stores located in Georgetown. As every Guyanese knows, prices and inflation in rural and hinterland Guyana are far higher.
Four, the work of the BOS leaves much to be desired. Several measures and surveys are outdated and insufficient. The bureau reports on its website that, based on a completed data collection exercise for the Household Budget Survey/Survey of Living Conditions 2018/2019, it plans to update its measurement of the consumer price index (from which the inflation rate is calculated). It is uncertain if that update has been done and presented. Even more, the bureau needs to spell out in detail how it tracks the price for every item in the consumer price index.
Perhaps, the new exercise will resolve mysteries such as why the housing inflation rate hovers around 0% despite the construction boom in the country. One would assume that the housing price index would include not just rents and mortgages, but also the costs of building materials and labour, both of which are in high demand. Is the continuous monthly 0% housing inflation showing that the Guyana economy can absorb high demand without inflationary effects or merely a lapse in data collection by the BOS?
In addition, one hopes that the new BOS project will re-activate the quarterly Labour Force Survey, last seen in the third quarter of 2021. The sudden disappearance of this report raises all kinds of suspicion about the motives of the government.
Yours respectfully,
Sherwood Lowe
