Retired top banker Al Jarrett is challenging a recent Central Bank of The Bahamas (CBB) assertion that inflationary pressure on the economy has been "benign", charging that current data tells a different story.
Jarrett is saying the CBB must be relying on stale data, as the most recent numbers out of the Department of Statistics are painting a more troubling picture of the year-on-year growth in consumer prices.  The CBB's governor, Wendy Craigg, was reported to have said that inflation was not a concern for the Bahamian economy, estimating it would come in at just over two percent for the year.
"I'm using the current trend and inflation is not benign if it increased to 3.5 percent this year," Jarrett said.  "[The Governor's] number of 2.1 percent is way off the mark.  I do see inflation as a concern."
In the CBB's August 2011 MEFD, inflationary pressures were described as being "relatively benign, although impacted by the recent firming in global oil prices".
The report cited inflation for the twelve months to June firmed by 0.9 points to 2.1 percent.
According to the Department of Statistics, the annual percentage change in The Bahamas all items index was 3.9 percent for July.  For January through July, the rate has increased each month, the percentage growth coming in at 2.1, 2.4, 3.0, 3.1, 3.5 and 3.6 for consecutive months from January through June.
Inflation is on an upward trajectory with nothing likely to alter its direction before the end of the year, according to Jarrett.  Higher oil and gas prices, along with increases in margin allowances to petroleum retailers, will tend to worsen the true impact of inflation on the economy, according to Jarrett.
Data for the retired banker's analysis covers up to September, he said.  The $0.10 and $0.15 increases in gas and diesel to retail distributors did not come into effect until this month.
The impact of that inflation on the budget ended June 2011 will be to "wipe-out" any growth there, he said, along with current growth projections of one to two percent.  For economists and statisticians, inflation is used to adjust the performance of gross domestic product from one period to the next.  It gives a context to understand how the economy is really expanding or contracting.  In the case of a salary, as the cost of living rises, an individual gets less bang for his buck.  The same principle applies on a national level.
But Jarrett was complimentary of what he described as a more "realistic and somber" position taken by Craigg, as reported last week.
He agreed with the negative implications for GDP growth drawn from the weak U.S. economy, itself struggling to achieve a meaningful recovery and substantial job growth.  Likewise, he agreed that the strong foreign currency reserves held by the Central Bank heading into the Christmas Season signaled poor consumer demand.  Merchants are not triggering major draws on the foreign currency position because consumers are not spending, due in large part to high unemployment, he said.
The former Bahamas Electricity Corporation chairman, however, was more pessimistic about when there would be a broad economic and employment recovery than Craigg's reported estimate of up to two years.
"There is nothing in the economy now that is going to cause any turn-around in two years," Jarrett said.
He estimated two-and-a-half years, or sometime in early 2014, is a more realistic timeframe for broad recovery.
A serious challenge to any meaningful interpretation of the data has been the absence of key reports and information, however.  In the case of tourism arrival data, for example, Jarrett said he was "extremely disappointed" that they have not been made available for any period since April 2011.
Guardian Business has been pursuing those numbers for several weeks. On Thursday afternoon, a Ministry of Tourism manager told Guardian Business they would likely be released late today for the period up to the end of August.
Similarly, Jarrett said he was still waiting for the results of the first quarter of the government's fiscal year to do some "hard analysis".  He said he expected that the lack of both sets of data suggested poor tourism sector and government budgetary performance.
The data, whenever released, will be the judge of that, but Jarrett said the key was that the Bahamian public has been deprived of the benefit of that information.  He commended the Department of Statistics for their 'openness and cooperativeness' in supplying data.

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