Daily Archives: April 15, 2014

A proof that Bolivia is not properly calculating its inflation: was it on purpose or…?

Hilton Heredia reports for El Deber:

The INE will amend the Consumer Price Index in 2015

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They will include new food, technology and transport products in the cost structure. A former president of the BCB noted different behaviors in each of the regions.

The National Statistics Institute (INE) enlists a survey of personal and household expenses to modify the calculation of the Consumer Price Index (CPI) in 2015. The study is made in response to international recommendations, said the director of the National Institute of Statistics (INE), Luis Pereira.

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In simple terms, the survey will measure personal and household expenses to modify the calculation of the CPI.

The parameters for the definition of the CPI will have a given time for modification, as technology, manufacturing, food needs and income levels changed in recent years, which will determine and announce the structure of expenditures in each household.

2014-04-14 09.10.42 am“Calculating the structure of household expenditure will be changed. In the pattern of household consumption and the overall economy, new products and new needs appear. For example, quinoa, was always there, but not much was consumed, it does now intensively. There are newer fruits, there are new modes of transport (in the case of La Paz, the cable cars, Pumakatari buses, etc.). There are new information technologies, massive cell phone use, tablets, etc. That will have to be upgraded to get an updated basket” summarized Pereira. [the cartoon is from El Diario, April 14. 2014]

Different behavior

In the opinion of former president of the Central Bank of Bolivia (BCB), Armando Mendez, the CPI reflects the behavior of 364 articles (items, called by INE) grouped into 12 groups. He notes that if the price behavior in groups is observed for 2013, is that each group had a different behavior.

“The area of ​​food rose 10.4% annually and communications had no variation. The IPC also is measured by cities, showing dispersion”, he said.

Exemplified that in Oruro the CPI was 9% and for Pando was 1.9%. Therefore, a wage increase equally in every city, in the terms that the government proposes, would benefit Pando at the expense of Oruro. Notes that do not take into account that there are companies that do very well and others badly. How is it possible that in such a situation, all [the companies] have to increase wages in the same proportion? Questioned Mendez.


There should be an increase of 15 % – Carlos Schlink – Economist

First of all, the food group must have a weighted priority. Bolivians assign more than 70% of their income to purchase food. In the second aspect, if the GDP and economic growth are analyzed in their cost structure, it is evident that consumption is what drives economic growth. There are gaps in health and education that are underestimated. On the other hand, the offer of the Minister of Economy is a sad reality of what the economy lives, this confirms the arguments that have been holding for more than three years ago, which has been deceiving people by showing fictitious figures, the General Budget of the State, the level of inflation, reducing poverty, and finally, the 2012 census data. There would be no reason to offer 7%, down from 10% of last year, if the growth of the economy of 2013 was above 2012, it is not justified to offer a lower percentage.


I’d say that current ochlocracy is facing an electoral dilemma… versus depleting more the resources that they manage but wish to continue with the bonuses, the “mirage” of their “competence”?!

From the first time, current government modified the CPI, it was evident that the insertion and exclusion of certain products made no sense whatsoever. As the results become more questionable over time, this attempt raise the question, whether this time will be a real adjustment or just plain cheap politics to disguise the wrongdoings and incompetence of an ochlocracy that wishes to remain in power forever…