Thursday, May 19, 2005

Government accuses GSLP/Libs of deception and misrepresentation

Row over interpretation of statistics

Chief Minister Peter Caruana has dismissed as “sheer ignorance” of statistics and economics” remarks by the GSLP/Liberal regarding the annual inflationary effect of the recent increases in water and electricity.

In a statement issued yesterday Mr Caruana said that if it is not ignorance “then it can only be another example of premeditated deception of the public.”

According to the Gibraltar Government, the Opposition claim that inflation will shoot up by over 12% as a result of this, is “absurd.”

Meanwhile the spokesman declared the annual inflation rate will remain at 3.1%, and also accused the GSLP/Libs of systematic deception “for the purposes of scare-mongering and misrepresenting economic and public finance issues.”

A Gibraltar Government spokesman said:

“The statement by the GSLP/Liberal Alliance Opposition in relation to the inflationary effect of the recent increase in Utility Tariffs as reflected in the General Index of Retail Prices as at 1st April 2005, shows a staggering degree of ignorance about statistics and economics.

The Opposition says that the increases in electricity and water tariffs caused the Housing Index (a constituent element of the Retail Prices Index) to “shoot up by 3.13% over the level on January 1st and that this is equivalent to an annual inflation rate for this component of 12.52%.” This remark is absurd and reflects a state of sheer ignorance. The Opposition appears not to know that the Index of Retail Prices reflects prices at any given date (in this case April 1st 2005). Accordingly, the year on year (annualised) inflation rate of 3.1% from April 1st 2004 to April 1st 2005 already includes the full effect of the Electricity & Water Tariff increases.

The Opposition appears to believe that because the tariff rises increased the Housing component by 3.13% over this first quarter, the figure over a whole year is 3.13% x 4, i.e. 12.52%. For this to be true the electricity and water charges would have to be further increased by the same amount three more times this year. In actual fact the effect of the Electricity & Water Tariff increases account for only 0.7% of the 3.1% annualised inflation rate as at April 1st 2005. Those increases will not result in any further increase in the annualised rate of inflation.”


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