RBA deputy governor Guy Debelle says this is not an attack on the Australian Bureau of Statistics, and it’s fair to say the ABS is under pressure with funding cuts leading to the agency this week week announcing a 17% reduction in staff.
But central bankers choose their words very carefully and in the start of his speech tonight (the start!), Debelle unloads both barrels on the paucity of data that the RBA and the economic community has to work with when it comes to deciding anything.
Check this out (emphasis added):
Some of the uncertainty relates to the frequency of data releases and the time it takes for data to be collected and published. Take the case of output and inflation, two of the most important summary statistics on the economy. It is now late October. But we won’t receive an official read on GDP in the current quarter until the December quarter national accounts are released in early March of next year. That’s more than four months away. This is by no means intended as any criticism of the ABS. It just highlights the challenges of compiling such statistics for an entity as large and complex as the Australian economy.
For inflation – which is also published quarterly in Australia – we won’t get an official read on the current rate until the December quarter Consumer Price Index (CPI) is released in late January, three months from now. In most other countries, the CPI is published monthly, so the wait to get an assessment on current inflation is not so long elsewhere.
More timely and more frequent estimates of output and inflation are not unambiguously desirable. There is clearly a trade-off between timeliness and accuracy. But, in the case of inflation, a more frequent estimate would help to identify changes in the trend in inflation sooner; it probably comes with more noise, but we have ways to deal with that. Any reading on inflation always contains varying degrees of signal and noise about the ‘true’ inflation process. At the moment, we need to wait three more months to gain a better understanding as to whether any particular read on inflation is signalling a possible change in trend or is just noise.
Debelle adds that the RBA has long argued for a shift to a monthly inflation print.
But this is a clear warning to the federal government that the RBA is making decisions on inflation – one of the core parts of its mandate – with insufficient data.
And the ABS is sacking people because their funding has been cut.