Reference is made to editorial in Guyana paper captioned “Big Market inflation” (SN Jan 14). The editorial is on astounding increase in prices of foods. When in Guyana, every couple month to conduct research surveys, I visited markets around the coast to check on prices. The prices listed for vegetables and fruits are about the same as those everywhere with slight modifications — Berbice had slightly lower prices for some items and higher for others while West Coast on the whole had higher prices except for ground provisions. Meat and eggs are higher on the West Coast and Corentyne than in Gtown. Overall, on average the listed prices match when one purchases a basket of goods for a family (of say four or five members). Rent (which is not listed) is higher in Gtown than in the rural areas. Cooking oil (also not listed) is higher in rural areas than in Gtown. Fuel (kerosene and gas, also not listed) are also higher in rural areas than in Gtown). Rural and hinterland regions have much higher prices than Big Market.
As per the listed, except for tomato, all items recorded a price increase of between 25% and 185% month on month December ’22 and Dec ’21. From my own research, December ’21 prices were up to 300% higher in June ’21 compared with December ’20 – attributed to floods of May and June ’21. Prices marginally declined in December ’21, remaining persistently high for almost every item. Tomatoes, for example, in December ’20 were $50 a pound as compared with $400 in June ’21.
In spite of such high increment in prices between ’21 and ‘22, Guyana recorded relatively low inflation of just about 7% for 2022, at par with the USA at 7.1%. That is an amazing achievement. Or is it? USA has some of the lowest price increases globally and yet recorded inflation of 7.1% while Guyana has among the highest price increases and recorded the same inflation as America. Something is not right about the measurement or calculation of inflation. Or they could be right – we just don’t know how inflation is measured.
It has been more than a decade since I last taught economics. So I am rusty on my principles of economics. My recollection is inflation, a general increase in the prices of goods and services in an economy, is measured through the total prices of a basket of goods over several periods of time, taken from a large number of consumers and collected at many locations (individuals or markets) – usually done monthly although some economies monitor it weekly. The data is reported monthly, quarterly, semi-annually, and annually for comparisons so that policymakers can get a handle on how to put a hold on price increases. In general, there is a standard procedure that is accepted by the World Bank and IMF in measuring inflation. Some countries tend to manipulate data for political purposes – to make a government look good and or to hold down on cost-of-living allowances (COLA) tied to inflation, wage increases, etc. The Guyanese dictatorship manipulated economic data on inflation and other indicators. In the US and developed countries, there are serious consequences in manipulating data. Staff could be sanctioned and face criminal proceedings. So data is not manipulated in developed countries like USA, Canada, UK, Germany, etc. (Annual increase in pension and Social Security payments are tied to inflation and as such voters want accurate data or they would punish politicians at the ballot box). In the US, agencies head that measure inflation are hauled before Congress to explain how they arrive at data.
It is not known how inflation is measured in Guyana – what basket of goods are used and where or how — but I am certain the standard is the same as in USA and other countries. The question is what goods and services are included in the Guyanese family basket to calculate the average cost for month–on-month measurements. Is the average cost taken at one market location or from how many households and where. The basket is expected to change because people’s habit change over time especially with a rise in income. Guyanese disposable income has increased over the last two years. So their taste or consumer habits would have changed from few years ago; basket of goods would have changed. It would be helpful to those who study Guyanese economy, as I do, if Bureau of Statistics and or the Central Bank could advise on how inflation was/is calculated (measured) and the prices used for the items in the basket of goods and services.
In the US, it is law that independent government agencies measure several types of inflation – Wholesale Price Index or WPI, Consumer Price Index or CPI, Core Inflation (CPI minus the cost of energy and rent or mortgage), among others.
I have developed a knack over the last few decades to visit markets wherever I traveled globally to check on prices and to compare with those in USA and Guyana. Guyana has some of the highest prices for foods globally. Foods in Guyana in general are much more expensive than in America while Guyanese wages are about a sixth of the US. In general, prices in USA are much lower than in other developed economies with the USA having among the highest disposable income. Prices in India are much lower than in USA.
There is no doubt that in Guyana standard of living improved in ’22 over ’21 and ’20. But inflation has seriously impacted on consumption, especially the lifestyle of those on fixed income (pensioners) and the poor. It is critical that inflation be accurately measured. Thanks for that list of items and their prices that make it possible to informally measure increase in prices.