Details about the “drop” of inflation in august : manipulation

Hurrah ! Inflation has been defeated (almost) in august, at 6,4 % (year on year = compared to august 2007) from 9,2 % in july.

Look at the headlines : “Easing oil prices help push August inflation down to 6.4%

Look at the chart.

We can almost hear some people : the crisis is over. πŸ˜‰

Of course it’s not.

Let’s have a look a the details of the CPI, to understand the miracle.

This is the composition of the “basket” to calculate the CPI, with the different items (groups) and their relative weight.

We can see that the groups “Housing” and “Transportation” are responsible for the fall (-9 and -7 % compared to the previous month).

But then we can look the details of the groups, and then the details of the sub-groups…

In yellow the proof of the manipulation :

-price of electricity is supposed to have dropped by 37 % in 1 month !
-water : -59 %

-public transportations : -4,5 %

etc. All the other groups increased a little bit (like Food Beverages +1,7 % in one month).

The manipulation is obvious : the (real) decline of fuels prices has been leveraged by the artificial “special package” decided by the government end of july (read here) : tax cuts, free electricity and water for small users (poor households), free rides on bus and trains.

It’s a joke. And this joke will last only 6 months…

What will happen after, mechanically ? A strong increase of the CPI.

3 Responses to “Details about the “drop” of inflation in august : manipulation”

  1. 1 chinesethai 3 September 2008 at 2:54 am

    I have not heard that people love free rides on buses and trains that much. Coz passengers need to wait at bus stops longer than ever for that free-ride bus. Also now is a rainy season, in which no one wants to get soaked any longer in evening heavy rain and traffic jam commonplace in Bangkok. Everybody wants to get home in rush hours ASAP. Who cares about free rides on very few routes?

    It makes people feel good. PPP politicians reap the benefit at the expense of the country’s pocket.

  2. 2 Bedwyr 3 September 2008 at 8:19 am

    So what the blog suggests is that rather than tell the truth about the economic situation, the government is cooking the books to create an impression of the economy which it knows is at variance with the truth.

    How very Thai of them.

    Of course the exercise here is transparent. The government will stay on at all costs until the budget is handed down. At that time they will be able to get their snouts and front trotters in the trough and ‘recoup their investment in campaign costs’. (perspective provided to humble Bedwyr from the secretary to a current Thai politician).

    The alleged ‘free’ electricity was denied to a very poor acquaintance of mine on the basis that she had used 9 units too much – so much for that bit of PR smoke and mirrors.

    Thais really are worthless.

    Here is a bit of insight into people, the same principle holds true for all nations. People get the politicians and government they deserve. Invariably, people vote for people they believe think like them, it is a human trait, a part of our hard-wiring.

    To understand any population, it is only necessary to look at the people they elect to government. To understand the Thai people – look at their government. Notice Barnharn, Samak, Chaperm et al. Then you will understand Thais.

    Sad but true. Only idiots or crooks would vote these people in; draw your own conclusions.


  3. 3 ThaiCrisis 3 September 2008 at 8:42 am

    Oh my god Bedwyr, you’re almost more cynical than me.

    But I can’t say that you’re wrong.

    To go back to the topic of economy, yes the gvt is doing everything it can to buy time. That’s all.

    Hence this “6 months rescue package”.

    The point is : no one cares to ask what will happen… after 6 months.

    It’s way too far away on the calendar. πŸ˜‰

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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