SSA data mess-up caused rate hikes!!!!!!!

[Skinner]

ohannesburg - The two-year delay by Statistics SA (StatsSA) in implementing the rebasing and reweighting of the inflation basket is having serious implications for the economy.

Calculations by Investec Asset Management have shown that the real inflation rate in the economy is probably far lower than the official inflation number, echoing the predicament in 2003 when CPIX inflation was found to have been overstated by 1.9%.

"Official CPIX for May was 10.9%, but had the numbers been rebased and reweighted last year as they should have been, our calculations show actual CPIX of 8.7%," said André Roux, head of fixed income at Investec Asset Management.

"The official peak in inflation in September will be in the order of 13%, once the impact of the electricity tariff adjustments is fully incorporated. Once again, if the rebasing and reweighting had been implemented, the real peak in inflation would have been around 10%."

From: http://www.fin24.com/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2358041

I guess it is safe to say, that the belts can be loosened a bit now, since it seems rate hikes are a little less likely now.
Doesn't mean you can run out and buy that new BMW now immediately, however.

 

[HavocXphere]

That is such a bloody BS story....saying its overstated because its higher than the figure arrived at if we use a different calculation.

 

[Ou grote]

From: http://www.fin24.com/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2358041

I guess it is safe to say, that the belts can be loosened a bit now, since it seems rate hikes are a little less likely now.
Doesn't mean you can run out and buy that new BMW now immediately, however.

StatsSA are not all that reliable, so we'll have to put up with a few more "belt" posts.

 

[DJ...]

That is such a bloody BS story....saying its overstated because its higher than the figure arrived at if we use a different calculation.

It aint like that at all. StatSA cocked up. I listened to the Roux interview on 702 (nice rhyme hey?) and StatsSA themselves changed the weightings of the calculation but didnt rebase at the correct time. If they rebase to 2008 which is their intention, inflation is actually only around 7.7% and to 2007 it is around 8.5% IIRC, and we have been severely fscked over by them - something smells very very fishy indeed.

Although I do know that StatSA is made up of incompetent fools having dealt with them on numerous occasions.

 

[feo]

Although I do know that StatSA is made up of incompetent fools having dealt with them on numerous occasions.

We had them come talk to us in our 2nd year stats class and let's just say I wasn't impressed by them.

 

[DJ...]

I used to get feeds from them. They are awful. Constantly getting the calculations incorrect. I was paying them for me to point out their mistakes so I eventually just began spending once a month compiling the data myself and running a macro, which is all they did as well, and still managed to cok it up.

 

[feo]

I used to get feeds from them. They are awful. Constantly getting the calculations incorrect. I was paying them for me to point out their mistakes so I eventually just began spending once a month compiling the data myself and running a macro, which is all they did as well, and still managed to cok it up.

Or you could've just asked one of us on the forum to do it for you.

 

[DJ...]

Or you could've just asked one of us on the forum to do it for you.

Twas before my forum days

But it involves an entire day of data compiling and you need some financial experience to scrub the data and results. I doubt any forumite would be happy to do this once a month for me...

 

[milomak]

I think there is a fundamental problem I have with what the Investec guy is saying. Is he saying that based on the latest weightings, if they had been used 2 years ago that inflation would be 2% lower or whatever the number is?

EDIT: What's not clear is whether StatsSA did the usual 5 year review but only implemented the changes 2 years later. Or did the survey after more than 5 years and implemented the changes in the usual time period. The former would mean there is a right to be aggrieved. The second would mean there might be a case to be aggrieved, but a change in methodology happens with most economies and there is usually a strong likelihood the change is not based on trying to manipulate the data in a certain direction.

 

[Lord Anubis]

errr hmmm leik this will make any difference to the "Inflation Nutter"!!

 

[Turiko]

No it wont make any difference except perhaps give Skinner more reason to troll here.

Even if the interest rates fell through the floor it would not make me go out and buy all I can eat...

I lead a pretty comfortable existence as it is. If anything I would invest more in my SMME- that is where I would spend. There is not much I'd want to buy right now considering all my PC's are upgraded, and everything's uhm, pretty much new!

 

[Skinner]

Uhhm, actually if interest rates are lower, people will go out and spend more on credit, like they did in the recent years before interest rates started to rise.

 

[sox63]

guess it is safe to say, that the belts can be loosened a bit now, since it seems rate hikes are a little less likely now.

Be honest, do you have a belt fetish of some sort? I can imagine your chick exclaiming:"You want me to do WHAT with that belt?"

 

[Arzy]

I think the problem is in the way that inflation is calculated.

As I understand the inflation calculation is made up of a basket of goods each with its own wieghting so you X% for food, Y% for fuel, Z% for clothing etc. What StatsSA is supposed to do is to determine what the average household expenditure is in this said basket of items and then provide the reserve bank with the information in order to calculate inflation.

So where previously cosumers were spending say 10% on food, 5% on fuel and 15% on clothes this has changed over time. Now we spend 5% on food, 20% on fuel and 5% of clothes so the basket used in the inflation calculation has to be adjusted to compensate for this.

What Roux in essence is saying is that if StatsSA had provided the correct product mix based on what consumers are actually spending and not what they were spending 5 years ago that the inflation figure calculated would be lower. That does not mean that prices would not be going up by as much but the way we percieve them would be less thus reducing the need to increase salaries as much because the calculation was based on how we were actually spending currently and not how we were spending 5 years ago.

The new basket also has a few extra categories for luxury items so it makes the calculation more accurate overall.

 

[Ou grote]

Uhhm, actually if interest rates are lower, people will go out and spend more on credit, like they did in the recent years before interest rates started to rise.

Yeah, we know, we know, we know.

Twas before my forum days

But it involves an entire day of data compiling and you need some financial experience to scrub the data and results. I doubt any forumite would be happy to do this once a month for me...

I just delegate that.

Be honest, do you have a belt fetish of some sort? I can imagine your chick exclaiming:"You want me to do WHAT with that belt?"

 

[Moederloos]

That is such a bloody BS story....saying its overstated because its higher than the figure arrived at if we use a different calculation.

Agreed.

One just needs to look at prices to see what inflation is. Manipulating figures to achieve some desired result is not going to bring prices down.

Let us just only include tap water and mielepap in the equation, and then give everyone free water and subsidise mielepap and we will have zero inflation!

Brilliant idea, Mr Mugabe.

 

[milomak]

Yeah Roux's areguement is based very much on a technical issue. I must concede however he does have a point in that this time round the rebasing wasn't done 5 years after the last rebasing. However fro what I understand this was because StatsSA did more work to make the data reliable.

It is interesting that he didn't make the same noise about PPI when there was a rebasing as that didn't suit the fact that producer inflation would fall. Because there too, StatsSA announced the changes but only brought the new index on stream after a period of time.

 

[Lord Anubis]

didn't Invesuck also take a recent thrashing on the market????? uhhmmm, errrr,,,wen u pointa da finger, your own middul finga pointa backa to u !!!!

 

[DJ...]

Yeah Roux's areguement is based very much on a technical issue. I must concede however he does have a point in that this time round the rebasing wasn't done 5 years after the last rebasing. However fro what I understand this was because StatsSA did more work to make the data reliable.

It is interesting that he didn't make the same noise about PPI when there was a rebasing as that didn't suit the fact that producer inflation would fall. Because there too, StatsSA announced the changes but only brought the new index on stream after a period of time.

Their ineficiency and lack of foresight has in itself produced its own inflation. As interest rates skyrocketed, so did the cost of living, which again fuelled PPI and therefore CPI. They created a false bubble of inflation by not introducing the correct calculations when they should have. They made a lot of people destitute in this process and one cannot forget that.

It isnt just a case of letting it go and moving on as Roux says. He has to because he is head of fixed income for Investec Asset Management. We need accountability for what was a lack of planning. We have been using the incorrect calculations showing a BS (inflated) inflation figures for two years because StatsSA were still busy with the weightings of a calculation that should have been used many moons ago. And their intention is to rebase to 2008, which would indicate 7.7% (IIRC) inflation, more than 2% more than the current inflation figures.

As Roux says, this isnt rocket science, and Investec and others were able to calculate this on their own.

 

[DJ...]

didn't Invesuck also take a recent thrashing on the market????? uhhmmm, errrr,,,wen u pointa da finger, your own middul finga pointa backa to u !!!!

That has to do with their exposure to the US sub-prime market and a general down turn in financial stocks. Should they not be pointing out a fundamental flaw in such a major economical calculation because their stock dropped a few points?

Investec pointed out a different issue to StatSA 5 years ago as well which resulted in them changing their calcuations. Had to do with rental figures IIRC...