Inflation is falling, and the government wants us to believe it is good for the economy. While disinflation is not necessarily bad, from a consumer’s point of view, it must not be used as a measure of a well-run economy either. There have already been issues about whether or not GDP is a fine yardstick for that purpose, but what is certain is that, for people to be happy and comfortable, there have to be the ability to spend. Purchasing power is what drives the economy, whether from the government, firms or households. Take one close look at the American economy, and you will realise how mush importance is placed on househld purchases. But the truth is that, people can not buy when they have no money, and they will never have money unless they have jobs.

Instead of pushing on with this inflation targeting, which has not silved any of our dire needs such as access to quality health and education, water, shelter and food, we should rather be looking to solve our problms directly. Every new administration finds ways and means of reducing inflation in ther first 20 or so months in office. But the truth is that, afterwards, things change and the reality befals them.

The Mills administration has already instituted measure to raise public sector wages, the biggest employer in the country. Though this has not yet been felt by the workers, what it will do is that, come the end of 2010, we are going to see rising demand for goods and services when every one has felt it in their pay package. This would definitely cause a hike in the Consumer Price Index. That is what the Economist-run administration is looking to foresatall. To further dampen the effet of this expansionary step, the former tax expert instituted rises in toll booths and approved utility tarrif increases, so that i now pay double what i used to. It has literally cut down spending.

2011 IS INFLATION YEAR!!

Graduates are now running after positions in the National Youth Employment programmes, and the census enumeration officers are all unemployed youth. All these, coupled with the pay rises, will definitely raise inflation figures by the end of the year. The government is actually dampening the effect of inflation in 2011 by curbing spending now. Imagine what the value would be if spending continued at the Jan 09 level of 19.86%.

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