NewsWhore
02-03-2011, 03:30 PM
The Central Bank has presented a new methodology for measuring the Consumer Price Index, in order to provide a more accurate reflection of inflation in the economy. The bank will also be using a monthly family basket of RD$10,407.56, and not the national average of RD$23,398.58 to calculate any increase in the minimum wage. The basket now contains 305 goods and services and represents 90% of the consumer spending in households. Before this new method was introduced, calculations were based on 245 items. Central Bank governor Hector Valdez Albizu presented the methodology yesterday, as the country is experiencing steep price rises in more than 20 basic products, leading trade unions to call for an overall increase in salaries and not just for the minimum wage.
Valdez Albizu made it clear that contrary to those who may think that the new methodology is a way of masking inflation, it reflects a greater increase in prices. At the same time, he said that there are no reasons for the price increases for farm products such as rice and beans, because there is a surplus on the market. He said that when discussing any possible salary increase, what must be taken into account is the minimum wage and this should be based on the average household expenditure of the first population quintile, which is RD$10,407 and not relate it to higher income households with a consumption of RD$48,665. "The first quintile eats chicken and the fifth quintile eats filet mignon and lamb", he said. "It is a mistake to take the average basket of goods and services to negotiate an increase in wages, but rather you have to locate each population group in their corresponding segments".
He said that the salary increase cannot be based on the basket of RD$23,398, because "that could cause a real problem", since salaries would go up beyond what is really necessary and this would create an inflationary spiral. Valdez Albizu stated: "That this is a very delicate issue, since we could see salaries pursuing prices". He believes that this is something that needs a lot of consideration. He said that the December family basket was barely 1.54% more than that of January 1999, which was set at RD$23,042, which is the average of the five quintiles. Therefore, the increases will be based on the quintile of the minimum salary in order to avoid injecting a very difficult incentive into the economy. At the same time, he understands the reasons for the protests in the country, because people were feeling the effects of energy costs. At the end of the year, the Central Bank will change the base year for the calculation of the GDP, because consumption and production patterns have changed.
More... (http://www.dr1.com/index.html#5)
Valdez Albizu made it clear that contrary to those who may think that the new methodology is a way of masking inflation, it reflects a greater increase in prices. At the same time, he said that there are no reasons for the price increases for farm products such as rice and beans, because there is a surplus on the market. He said that when discussing any possible salary increase, what must be taken into account is the minimum wage and this should be based on the average household expenditure of the first population quintile, which is RD$10,407 and not relate it to higher income households with a consumption of RD$48,665. "The first quintile eats chicken and the fifth quintile eats filet mignon and lamb", he said. "It is a mistake to take the average basket of goods and services to negotiate an increase in wages, but rather you have to locate each population group in their corresponding segments".
He said that the salary increase cannot be based on the basket of RD$23,398, because "that could cause a real problem", since salaries would go up beyond what is really necessary and this would create an inflationary spiral. Valdez Albizu stated: "That this is a very delicate issue, since we could see salaries pursuing prices". He believes that this is something that needs a lot of consideration. He said that the December family basket was barely 1.54% more than that of January 1999, which was set at RD$23,042, which is the average of the five quintiles. Therefore, the increases will be based on the quintile of the minimum salary in order to avoid injecting a very difficult incentive into the economy. At the same time, he understands the reasons for the protests in the country, because people were feeling the effects of energy costs. At the end of the year, the Central Bank will change the base year for the calculation of the GDP, because consumption and production patterns have changed.
More... (http://www.dr1.com/index.html#5)