Economists slam switch to quarterly inflation data

The government's decision to switch to release quarterly inflation data from its current monthly practice has been met with criticisms from economists, who said the move would not be good for the economy.

“We are moving in the wrong direction,” said Ahsan H Mansur, executive director of the Policy Research Institute.

Everywhere in the world there is effort to increase the data frequency, whereas in Bangladesh it is the opposite, he said. “This is pathetic.”

On May 16, Planning Minister AHM Mustafa Kamal announced that the government will release Consumer Price Index data on a quarterly basis from now onwards instead of monthly, a tradition that the Bangladesh Bureau of Statistics has been maintaining for years.

The decision to switch to quarterly data comes at a time when inflation, a measure of changes in the prices of a basket of goods and services, is on the rise owing to a spiral in prices of rice, the staple food.

The quarterly inflation data, the first ever in the country, showed that consumer prices edged down to 5.28 percent in the January-March period of 2017 from 5.32 percent in the preceding quarter.

However, the monthly data that was given to reporters later at his office showed that inflation rose in March from February.

Kamal said the BBS will continue to prepare data every month.  “But I will not sign the file -- I will not officially acknowledge it.”

He said he did not see anything wrong in releasing the inflation data every quarter instead of every month. “This is good.”

The decision to switch to quarterly data was taken as the BBS cannot properly capture the monthly changes in CPI timely, Kamal said.

Mansur though differed with Kamal.

He said the statistical agency made a lot of progress in price data collection in the last two-three years. He said the agency were collecting data from field, with collectors sending the data via mobile.

“This decision will change the whole process,” he said, adding that many countries including China and India release CPI data weekly basis.

CPI data was supposed to be weekly instead of monthly, Mansur said. “Just because inflation is rising now, hiding it from public is not going to serve the government.”

He also criticised the practice of signing off historical data like inflation, which are collected and processed technically, by a minister.

“Ministers or politicians have nothing to do with approving historical data,” Mansur said, adding that the step 'unnecessarily' creates doubts that politicisation of data is happening in Bangladesh.

Instead of delaying release, steps should be taken to plug in loopholes of data collection if there is any problem, said Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue.

He said inflation is not linked with consumers' interest only. It is inter-linked with wages, production cost and profitability of entrepreneurs.

“Quick release of CPI data will be good for the economy,” he added.

Timely availability of key economic statistics contributes to sound macroeconomic policies and the efficient functioning of markets, said Zahid Hussian, lead economist of the World Bank's Dhaka office.

“There is a saying that if it isn't broke, don't fix it,” he said, adding that the CPI data release practice followed by the BBS had been working well.

“There is always room for improvement. However, moving from monthly data release to a quarterly release will be a reform of the regressive kind.”

There needs to be a roadmap to achieving higher data dissemination standards at a pace consistent with the evolving capacity of the BBS, he said.

A positive step forward in this direction would be to announce a CPI release calendar as they do in India, Sri Lanka and the United States, among others, Hussain added.

Instead of releasing inflation figures on quarterly data the government should take steps to release quarterly GDP figures, said Selim Raihan, professor of economics at the University of Dhaka.

He also called for propping up the BBS's capacity.

“We are aware of the imperfections of BBS data, but we are not concern about them that much. We will be concerned when we will get data belatedly.”

The delay in the release of data will not only affect researchers but also businesses. Businesses will face difficulty in forecasting prices and taking decisions.

Inflation and interest rate are treated as high frequency data, which helps policymakers analysts and others understand the trend of economy, he added.