Editorial: Inflation data needs to reflect the reality of life

Kenya National Bureau of Standards’ official shift to a new Consumer Price Index on Wednesday, though long planned did not come without surprises.

Besides unravelling the thinking of the mandarins at the Ministry of Planning about the changes that have taken place in Kenya’s economy in the past decade, new additions to the basket of goods that make the index and the weighting that has been given to the various components of household expenditure is not only telling but highly controversial.

Take new additions to the basket of goods that make up the CPI as an example.

In KNBS’ understanding, communication has become an important item in many households that now takes up to 3.8 per cent of total expenditure – more than what they spend on education (3.14 per cent) and health (3.13).

It may be that to the statisticians at the bureau of statistics, these types of conclusions have some substance behind them.

But the ordinary Kenyan, who spends so much money on school fees, and medical services these figures sound as if they have been plucked from outer space.

To imagine that a household with two children in primary school and another one in secondary school could be spending more of its money buying mobile phones, topping it up for airtime or accessing the internet is to stretch the imagination of ordinary folks too far.

The makers of this index also appear to be oblivious of the heavy price that ordinary folks are paying for ill health.

One sick member of a family alone is enough to demolish the asset base of many a household – forcing them to sell key assets such as livestock or cereal stocks.

Besides, the crafters of the new CPI appear to be little concerned by the intense debate that it has generated since it was unravelled in October last year.

To millions of ordinary Kenyans, measuring inflation should not be an activity in abstraction that is the preserve of some few mandarins playing with figures on a computer spread sheet.

It should be an exercise that is rooted in the realities of everyday living as is captured by prices on shop shelves, at the fuel pumps or even in the restaurants and bars.

Yet one clearly sees an overzealous attempt to dampen the overall impact of any item whose pricing has proved to be volatile in the past such as electricity and petroleum by lumping them together with more stable items such as housing and water.

Ultimately, Kenyans are henceforth likely to be feeling the pinch of escalating prices in many markets that provide them with the essentials of living without seeing the same reflected in official data.

Though persistently low inflation figures might help the country attract a few more foreign investors, it remains to be seen what its impact will be in critical areas such as the labour market where negotiators of collective bargaining agreements will have to use the official data despite the heavy weight of price escalation those they represent will be bearing.