Verily Verily Unto The Foolish Economic Gospel of Dull Hypocrite Lazaro Didimus
The man of opposition continued to speak from the pulpit of political narratives “verily verily, I say unto you that a single digit inflation which does not translate to socio-economic growth among the majority of Malawians is nothing but a fluke. They are saying inflation is single digit, meaning things are getting better. Where are those things getting better?” Drowned in the choruses of “hear, hear” he continued “when things are going on well in a country, it should not be leaders who should be saying that but rather people who are feeling the impact of such positive developments”. After a little silence, the ordained economic messiah continued “verily, verily, I say unto you, He that heareth my word, and believeth on me, has everlasting economic and prosperous life, and shall not come into condemnation; but shall dismiss the gospel of inflation getting down to single digit”.
The latest figures on inflation that were the subject of the above sermon were released by the National Statistical Office in Zomba which put inflation at 9.93 percent in May. St Lazarus has in the past used the figures released by the same institution to make his case that the current government is failing. In his response to the SONA in May 2017, the leader of opposition started his response by narrating how the economy was not functioning and he specifically mentioned the high inflation as one of the causes. This high inflation the Reverend used was calculated by the very same people who have now given a single digit rate, using the same method. To remind the readers this is what the MCP President actually said “the headlines from our daily papers range from stories about theft of drugs…high inflation, and the rising cost of living”.
While it is understandable that the statistics of the inflation rate is received with scepticism by the general public, it is another thing to accept the figures when it suits him and then dispute them when they do not support his political narrative. Of course there are many reasons why people dispute inflation figures. There are those who believe that the calculation of the index does not use actual market prices that most consumers pay. They are probably collected from a few selected places that are not representative of market prices. There are also some doubts as to whether certain commodities are dropped from the index when their prices rise on the spurious grounds that these are not bought by people. But is this the ground for a leader in waiting to begin to question the statistics simply because they do not fit into his narrative? Is this not a lack of honesty, integrity and total disrespect to the civil servants whose job is to provide the figures that politicians use to advance their cause?
Maybe Dr Chakwera’s perception of prices is partly due to a lack of understanding of price indices. The deceleration in inflation is not believed as it is often misunderstood as a decline in prices. This is certainly not the case. When the rate of increase declines, prices are still continuing to increase, though at a lower rate. When people experience further increases in prices, they tend to disbelieve that the rate of inflation has declined, as prices of commodities have not decreased. For instance, if the monthly rate of inflation were to be 9 percent in September, what this means is that average prices rose by 9 per cent. This is an increase on top of August increase in prices.
It would also be helpful for the leader of opposition to learn that the increase in the consumer price index (inflation) is an average of all consumer prices, where some prices such as those of fuel would not have increased, while food prices may have increased by a certain per cent. The perception of the general public is based on those prices that affect them mostly. Since food prices (mainly maize) have not risen sharply in recent months and because food prices and especially maize make up a bigger proportion of the basket, it is possible that the index was weighed down by those factors. In addition the Kwacha has maintained relative stability adding to the lowering of imported inflation that normally manifests itself in non food prices.
Besides these misconceptions on what inflation means and its measurement, there is a current debate as to whether Malawi is at the end of double digit inflation and whether the rate of inflation would rise again this year. It is very likely that that inflation rates might hit the double digits again before the end of the year in December. The pressure on food prices and the fact that the import bill might increase as the country imports for the agricultural season might move the rate back to double digits.
So instead of Dr Chakwera dismissing the figures on inflation maybe he could benefit from his advisors on the discussing the direct relevance to the issue of whether the monetary policies in place could cope with a possible resurgence in inflation in the near future. In the spirit of the gospel I will finish by the verse from another of St Lazarus’s verses “I trust that the people of Malawi will make their own judgement as to which one of us is painting a picture of the way things are and which one of us is living in the fantasy world of half truths, denial, and distortions”.