Monday, 23 April 2012
Inflation: When Perception meets Reality!!
This article briefly looks at the effect of the current Retail Price Index (RPI) weights on the calculation of inflation in Barbados with particular reference to the impact of Fuel & Light.
The Barbados Statistical Service (BSS) has periodically rebased the RPI and its weights (October 1965, March 1980, May 1994, July 2001) and by our estimation should have rolled out a revised RPI sometime ago.
We have therefore conducted a series of simulations to determine what is a more realistic set of RPI weights (October 2008) that in our view better reflects the evolution of energy prices over the last 10 years. We also briefly examine the prospects for economic growth in the context of both the BSS estimated inflation and our simulated results.
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