Treasury officials insists inflation figure is not misleading

Manx money

Manx money

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Treasury officials have denied that figures given for the island’s rate of inflation are misleading.

The Federation of International Employers accused the Manx government of getting the figures for the Retail Price Index ‘seriously wrong’ - and claims this could cost island-based companies dear.

Robin E.J Chater, the Federation’s secretary-general said: ‘The latest government statistical agency to get their statistics seriously wrong is the UK Crown Dependency of the Isle of Man.

‘The error could cost companies operating on the island a considerable amount - as it involves the Retail Price Index.

‘The latest figure for August 2016 gives the annual rate as 4.0 per cent, or 4.6 per cent excluding housing. This compares to a consumer price index that is much lower at -0.5 per cent for the same period.

‘However, when calculated using the official weights for each item in the constituent ‘shopping basket’ the annual rate should be +0.33 per cent whilst the rate without housing would be even lower, not higher.

‘The difference between the correct figure and the published “official” figure is 3.67 per cent. If translated into a cost of living payroll adjustment for a typical 100-person company it would amount to a needless additional cost of over £130,000.’

Mr Chater said the Federation had advised the Manx government to consult HM Treasury to get some guidance. ‘However, officials are usually angry and defensive when we point out their mistakes (which we frequently do),’ he added.

A government spokesman said: ‘It is a presentational issue, the numbers are not wrong.

‘The column being referred to is the “12-month change” column of the CPI/RPI report. This shows the contribution to the overall rate of inflation derived from each sub category and is intended to show how much of the 4 per cent overall figure comes from say food or travel.

‘The actual rate of inflation within each category is not shown and therefore the calculation as made by Mr Chater cannot be done from the information provided.’

The spokesman said that from next month, the tablulated summary for the rate of inflation will be altered with the heading for the 12 month change column altered to “Contribution to all items 12 months percentage change” to avoid any further confusion.

Inflation is measured by both the Retail Price Index and the Consumer Price Index. Each take a basket of goods – food, clothes, petrol - looking at what they cost last year, looking at what they cost now, and finding the proportional difference. RPI always gives a bigger figure for inflation than the CPI.

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