The failure of inflation figures to reflect the rand’s plunge raises doubts about the data’s accuracy, report Madeleine Wackernagel and Mungo Soggot
SCEPTICISM about the reliability of South Africa’s statistics is spreading to inflation figures in the wake of repeated complaints about the accuracy of the monthly trade numbers generated by Customs & Excise (C&E).
Transnet economist Mike SchUssler says faulty trade data from C&E are distorting the import component of the Central Statistical Service’s producer price inflation (PPI) figures. Among the highlights of this year’s trade data botches, says SchUssler, are that South Africa imported eight million buses at 34c each, thousands of television sets at R23 apiece and panties costed at R48 each.
He said the import component of the PPI should be outstripping the local component, dragging the overall rate of increase in the index up to about 7,6%. The latest figure for the PPI, released last week, showed a rise of 6,6% in July.
Dr Ben van Rensburg, chief economist at the South African Chamber of Business, concurs: “With the 23% depreciation in the rand so far this year, one would have expected import prices to show substantial increases. Instead, the local price rises have driven the PPI more than import prices, which indicates the statistics are faulty.”
But Edey Rogers economic consultant Edward Osborn said that even with the three-month lag in the C&E data, the import component’s failure to react made sense if the cuts in import tariffs and the removal of the surcharges had softened the blow of the weaker currency. He warned that when it came round to October — the anniversary of the abolition of import surcharges — there could be a massive jump in the import component as the index bore the full brunt of the rand’s devaluation.
Osborn was not that concerned that the CSS was using C&E data. He said that although the figures were often faulty with regard to the quantity of imports, the department’s measurement of unit costs appeared reasonably reliable, albeit with a three-month lag.
SchUssler was not convinced of the tariffs explanation, arguing the reductions only accounted for 5% of the total picture.
Van Rensburg highlighted another problem with the unreliable data: “With the increasing globalisation of world trade, more and more countries are having to rely on anti-dumping measures to ensure fair trade. How can we fight against unfair competition if we don’t have the correct statistics? We’re left without any quantifiable basis for complaints.”
But inefficiency and corruption aside, a bigger problem at the C&E is the lack of equipment and the appropriate data-collection and dissemination methods, says Van Rensburg. “Rubbish in can only mean rubbish out,” he says. “They need to upgrade their technology. But they need time.
“We are in constant contact with the relevant departments in a bid to find a solution. One is a data base designed by a private sector company, believed to do the trick. Until we have the right system, we have no idea of the extent of the problem.”
Privately, some Reserve Bank officials are seriously concerned about the unreliable data, although Dr Ernie van der Merwe, chief economist, says one should look at broader three-month statistics for a more accurate picture.
“In any one month something can happen, such as a big oil shipment, which distorts the figures. And while there is a certain margin of error in the C&E statistics, I have no reason to believe the C&E margin of error is greater than any others. All macro-economic figures are liable to some discrepancy.”