World
Institutional
links
Welcome back on
26 -29 August,
ONS 2008
Bridging
the energy gap
is ONS 2006 theme,
from 22-25 August,
in Stavanger, Norway
Petroleumworld
Business
Partners:
Centre for
Global Energy
Studies
  |
|
Editorial Commentary
VenEconomy:
A suspicious index
A few weeks ago, the Government and the Central Bank of Venezuela (BCV) inaugurated the new Consumer Price Index (CPI) with much fanfare. Besides including samples from the Caracas Metropolitan area and Maracaibo, it also includes samples from around the country.
The new National Consumer Price Index (NCPI) includes samples from the 10 most important cities around the country, as well as 74 other medium and small sized communities, and rural areas which are included under “Rest,” which will have a weight of 45% within the NCPI.
Unfortunately, this new index doesn’t inspire much confidence. On the one hand, because it is missing some data in its makeup, and on the other, because of the discrepancies its figures reflect.
For example, nobody understands why the 74 other communities and rural areas were assigned a weight of 45% and why their names haven’t been announced; even more so, when one understands that it is a fact that more than three fourth of the country’s population lives in the 10 main cities around the country.
This suggests that the rural area has been given too high of a percentage to represents its national consumption. By its nature, the rural area is the area less affected by inflation.For example, the cost of transportation does not influence the economy as much in the rural areas as it does in the cities.
Furthermore, the heterogeneous nature of the 74 other communities labeled “Rest,” make it so that they are easily influenced by other variables that the Government has put into play, like the barter system and the issue of local currency which could misrepresent a drop in prices, creating an artificial value.
The doubts that were circulating about the new CPI were reinforced this past April 7th when the new index was published, which reflected a surprising drop in inflation in March compared to January and February. According to the new index, January inflation was at 3.1%, February at 2.1%, and March at 1.7%.
It’s logical to think that the average cost of living at the national level is lower than the cost of living in Caracas, but what is not logical is that inflation in the rural areas is consistently going to be less than inflation in the cities. According to the BCV, the CPI in Caracas was higher than the National index by 0.3% in January, 0.2% in February, and 0.6% in March.
Another thing that indicates that things aren’t quite right with the NCPI is when you compare the Cendas family basket calculations, made by the recognized analysis center of the National Federation of Teachers, which have managed these figures in a very disciplined manner. According to Cendas, the family basket increased by 9.1% during the first quarter in contrast to the 8.2% increase reflected by the traditional Metropolitan area index and the “mere” 7.1% increase posted by the new index.
At VenEconomy, we believe that the lack of information in the structure of the new index, coupled with the lack of any official explanation concerning the new adjustments have left the whole situation wide open to doubts and speculation about this just being another of the Government’s attempts to manipulate figures in order to make Hugo Chávez’ Administration look good.
VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by VenEconomy, on 04/14/2007. Petroleumworld reprint this article in the interest of our readers.
Fair use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.
Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld welcomes your feedback and comments: editor@petroleumworld.com. By using this link, you agree to allow E&P to publish your comments on our letters page.
Petroleumworld News 04/15/08
Copyright© 2008 respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.
Send this story to a friend
Your feedback is important to us!
Readers' comments: share your thoughts on this article.
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.comBest Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels