Zimstat tweaks CPI weights

THE Zimbabwe National Statistics Agency (Zimstat) says it has changed the classifications and weights that it uses in preparing the Consumer Price Index (CPI) in order to conform to international standards.
This comes as the credibility of the agency’s statistics has been brought into question many times by a number of analysts and independent economists.
“With effect from March 2019, Zimstat is publishing the new CPI with new weights and a classification in accordance with international guidelines,” the state agency said in a comment accompanying the country’s inflation figures for March 2019.
“The use of a classification of individual consumption by purpose resulted in the creation of a new classification which resulted in coming up with 83 classes, 41 groups and 12 divisions.
“The implementation of the classification is also part of the harmonisation project of CPI in different regions like the SADC region,” the agency said.
The harmonisation project requires all member states to adopt the new procedure to enable inter- country comparisons of the CPI and the rate of inflation.
The modifications are, however, not likely to allay concerns about the accuracy of Zimstat’s figures, which are not going to change the rates of inflation.
Zimstat said the indices prior to March 2019 were re-referenced to February 2019 being set at 100.
“The rates of inflation remain the same under different weight regimes as the relative magnitude of indices is maintained. The new weights are therefore applicable from February 2019 onwards,” the agency said.
Meanwhile, Zimstat said the year-on-year inflation rate for the month of March 2019 as measured by the all items CPI stood at 66,80 percent. This represents an escalation from a rate of 59,39 percent reported for February.
“This means that prices as measured by the all items CPI increased by an average of 66,80 percent between March 2018 and March 2019,” Zimstat added.
Still, Steve Hanke, an American applied economist who has famously disputed Zimstat figures for years, continues to assert that the country’s inflation is much higher. His latest calculation puts Zimbabwe’s inflation as at April 14, at 217 percent.
Many others have also cast doubt over Zimstat’s figures. British research firm BMI contends that the national statistical agency’s decision to compile and report inflation quoting prices in hard currency terms at a time when the United States dollar was not necessarily the functional currency, may have distorted the figures. Local research firms, Econometer Global Capital and Equity Axis, have also expressed doubts about the state agency’s figures.
Government says it anticipates inflation to have dropped to between 10 percent and 20 percent by the end of the year.
Equity Axis, however, says this implies an average negative month-on-month inflation for the remainder of the year.
“At best if month-on-month inflation comes in at zero percent, inflation will close the year in the region of 35 percent. This outcome is, however, highly unlikely,” the advisory firm said in a comment las