Bob Richards: ‘Process of measuring inflation is producing results that everybody knows are wrong’
Failure to update how official inflation figures are measured for nearly a decade has left the information “meaningless”, a former finance minister has warned.
Bob Richards, the finance minister for One Bermuda Alliance between 2012 and 2017, dismissed government claims that the “basket of goods” used to evaluate inflation could only be changed every ten years.
Mr Richards was the last finance minister to update the measurement – a snap shot of the price of various essential items – in 2013, and insisted the Government could bring in a more realistic assessment anytime it wanted.
On the ten-year claim, Mr Richards said: “That’s an excuse. They can do it whenever they like.
“The process of measuring inflation is producing results that everybody knows are wrong.
“It does not have to be every ten years, there is no reason that they couldn’t accelerate things.
“The figures do not reflect the reality and are useless and misleading.
“It just defies common sense that we have inflation that is significantly lower than the US.
“It is misleading – but, nobody is fooled by it.”
The remarks come after Jason Hayward, the Minister of Economy and Labour, claimed the basket of goods could only change once a decade as he indicated it would be revised next year.
He said recently: “The basket of goods does not get revised on an annual basis because the inflation numbers are used as benchmarks for other economic indicators.
“And so, in order to have a constant source of economic data you will not revise the basket of goods on an annual basis.”
Mr Richards said that the Government had little room for manoeuvre on the cost of living crisis except to slim itself down and let private enterprise create jobs.
He said: “There is not enough competition in Bermuda to drive down prices.
“The Government is too big for Bermuda.
“Bermuda had a bigger economy and population 20 years ago, but the Government is still the same size, if not bigger. Slim down the Government and fatten up the private sector.”
Mr Richards said that price controls would not work. He said: ‘They are just not effective.“
US inflation stood at 8.3 per cent in April, slightly down from the 41-year high level of 8.5 per cent in March.
While the level of price increases registered in Bermuda in February, the last month for which figures are available, was measured at 2.5 per cent.