6
/ Wednesday, April 20, 2022
Economists question the validity of Puerto Rico’s inflation statistics little measuring and updating”, he added after admitting that inflation on the island, while underestimated, doesn’t exceed that of the U.S. For Villeta Trigo, subsidies, federal funds and government aid have served as a kind of buffer that has acted upon cost reduction. “There is no other way to look at it. Inflation —which is nothing more than an increase in Ileanexis Vera Rosado, The Weekly Journal prices— is a social evil that impedes society to continue living… It doesn’t allow budgeting, thus society cannot function”, he argued. hile in the US. inflation Despite the cost of energy being excluded from rate stood at 8.5% by the CPI, it is one of the reasons why economists the end of March —the insist inflation in Puerto Rico is above the 4.7%, highest level in the last estimated by the Department of Labor and Human 40 years— it is estimated Resources. it reached 4.7% in Puerto Villeta Trigo estimated the cost of energy and Rico, a figure economists the cost of transportation have had an increase of on the island do not agree with because it is based 18.4% and 32%, respectively. on prices from a food basket dating back to 2006. For economist Leslie Juan Villeta Trigo, president Adames, the cost of electricity of the Puerto Rico Financial is not taken into account in Analysts Association, and who the CPI, to avoid mentioning was also the project manager the burden it represents to for the last review of the the consumer’s budget. “The Consumer Price Index (CPI) problem calculating the CPI The last review of in 2006, argued the figure stems from the data used in the Consumer Price published by the government Puerto Rico, vis a vis the data Index (CPI) was done “is real” because it corroborates used in the U.S. A 4.7% inflation in 2006. [the information from] collected is very low and does not make statistics, despite them not sense based on what we are being accurate or precise. experiencing”, he said. “The survey says that’s the Adames emphasized that the number, even if it is poorly difference between the figures for Puerto Rico and designed or incomplete. It must be admitted that the U.S. “is worrying.” we have flaws, but funds are not being allocated Having such inaccurate data also worries to bring in technical personnel. Without that, we economist Adrián Alós, who considers that, can’t get very far in telling the truth. In the U.S. they have a very sophisticated statistical structure,” consequently, the government has no updated and truthful information, making it impossible to take said Villeta Trigo. “In Puerto Rico, we are behind the correct decisions. in the cost analysis and adjustment. There is
Calculations are based on prices of a food basket dating back to 2006
W
In fact,
It must be admitted that we have flaws. Juan Villeta Trigo President, Puerto Rico Financial Analysts Association
“The [inflation] rate is wrong. It is much higher than that. Here, most of the goods are imported from the U.S. and if prices have increased there, how much more so here, where the cost of transportation must be added? The pattern of consumption on which the analysis is based, has changed significantly since 2006. This index must be recalibrated and the [food] basket updated,” said Alós, who estimates inflation on the island must be around 7.5%. On his part, economist José Alameda agreed that the island’s inflation rate “is not very credible” and attributed the lack of certainty to problems with the data from the Price Index. He explained that fine-tuning the Index would require surveys every ten years on the income and expenses of consumers, a consumption pattern that changes over the years. This survey has not been conducted since the administration of former governor Aníbal Acevedo Vilá. “Given the situation, the data does not correspond to Puerto Rico’s current circumstances. It [the data] has little credibility. Here, where there is a monopoly or an oligopoly structure in place because almost everything we consume comes from there [the U.S.], it [inflation] seems even higher than in the US. Definitely there are many hurdles with the reality”, Alameda said.
