Tito unhappy with Investec

Below is part of an article out of business report on comments made by the Governor of the reserve bank regarding the report by Investec that inflation figures, as reported by StatsSA are incorrect.

Johannesburg – Tito Mboweni, the central bank governor, criticised Investec Asset Management yesterday for questioning the country’s inflation data, saying the money manager should have first consulted the head of the statistics department.

Mboweni said in an interview with 702 radio: “I will be guided by data released by the statistician-general.”

Investec should have taken its concerns about the data to Statistics SA before publishing its conclusions, he added.

The country’s second-largest private money manager said on Tuesday that the May inflation rate of 10.9 percent had been overstated by 2.2 percent because the statistics office had delayed adjusting the product weightings in the consumer price index by two years.

What I am concerned about is that the Governor has on criticized the actions of Investec, he has not said that their report is incorrect. He says that they should have gone to StatsSA first. This may have been the correct course of action, but would it have achieved anything. If StatsSA is incorrect then many South Africans may have been foreclosed on incorrectly and we have endured more pain than required.

Furthermore, if the figures are incorrect then what of the wage settlements that have happened, which in the main have been in the double digits. The down-the-line effect of these means that inflationary pressure has been added to.

Come now, if the Investec report is correct, then StatsSA needs to acknowledge and then the governor will need to temper the outlook maybe moving from hawkish on the possibility of further rate increases, to maintaining the levels.