Government statistics chief on the spot over economic data

By Morris Aron

Anthony Kilele has his reasons for not talking to the media, as most directors of parastatals and sensitive government offices are known to. It could be out of choice or survival necessity or may be, it could be that he is just shy.

As the head of the Kenya National Bureau of Statistics, there is every expectation that he comes out more often to explain statistics.

Being the country’s data source, there is absolutely every need for interaction for the public see the Bureau’s point of view.

It is even more crucial that he does so, especially now that there is the component of cost of living in what he communicates every month to the public.

In other words, Kilele may need to be a bit convincing on issues to do with inflation and the trends and whether Kenya is merely being a copy cat by adopting international standards on computation of key data sets, not withstanding its effects on the population, strategy for corporates, and Government planning.

Explanation

From a far, it is increasingly becoming clear that KNBS is falling into a monthly habit whereby reports on inflation cuts across and reads as if it has been derived from a template.

Explanations as to the causes of the changed scenario are scanty and appears to be rushed and non-committal.

This trend has in the recent past caused some concern among level- headed intellects – economists, planners and bankers among other professionals – who now question whether KNBS monthly statistics are a bit too many and the answers too short.

Statistics after all might be challenging, as adding numbers and carrying out research is not an easy task and the questions could be many and lingering.

Curious though, in August 2009, Mr Kilele’s team introduced a new inflation computing method, which is stillthe subject of debate. 

Since its introduction, the inflation picture looks increasingly benign, having dropped from a peak of 19.6 per cent year-on-year in November 2008 to a low of five per cent 12 months later.

Under an arrangement brokered by the International Monetary Fund, the Central Bank and a group of economists, it was generally agreed that Kenya reduces the ‘weight’ of food in its consumer-price index.

In the deal, the idea was that the influence of food on the overall inflation be restricted.

Consequently, food, which had previously accounted for 50.5 per cent of the Kenyan consumer basket was reduced significantly. In addition, a number of new items were introduced into the CPI basket to capture the current realities.

Food has a weighting of 27.2 per cent in neighbouring Uganda, and Tanzania also plans to reduce the food component from 55.5 per cent currently to about 44 per cent.

The arithmetic system is said to magnify upward movement when measuring changing commodity and service prices, while depressing the downward movement of the change.

The effect has been to distort the inflation rates issued by the KNBS and by extension, coming up with the wrong information on market.

Food index

The approach, however, obscured the fact that pressures remain on food prices and that the favourable trend initially witnessed is more due to high base effects than an easing of food price pressure.

In August 2009,  Kilele was adamant that the method of calculating inflation was flawed and not representative of the economic realities.

What is emerging of late, however, points to something else.

As a nation, the technocrats could have made a technical mistake with that whole arrangement.

By suppressing food, given that most of the people in the economy spend most of their incomes on food and other basic commodities, there could be something else KNBS is not capturing.

The biggest problem, a number of economists argue, is that given the critical role of inflation figures on investment, planning and other concerns, if the new method is missing some aspect of reality, then Kenya could face planning challenges.

It is therefore time for Kilele and consumers to start thinking whether there is something the new method is not capturing.