Governments worldwide have been in the habit of manipulating economic statistics to portray a rosy picture of the economy to its citizens. One of the most commonly manipulated economic indicators is the inflation rate. The government’s inflation figures are often lower than the actual rate, making people believe that their purchasing power is stable when, in fact, inflation is worse than government lies claim. This manipulation allows governments to control people’s perceptions, but the real cost of this deception is ultimately borne by the public.
Inflation is a term used to describe the increase in the price of goods and services over time. It can be caused by various factors, including the increase in money supply, high demand for goods and services, and the cost of production. Governments typically measure inflation rate by comparing the prices of goods and services over some time, such as a year, and calculating the percentage increase. However, this method fails to account for the real cost of inflation.
Governments can manipulate inflation figures to make them appear lower than actual. One way they do this is by limiting the basket of goods and services included in the calculation of inflation. By doing so, the government can exclude essential items whose prices significantly impact citizens’ standard of living, and therefore the actual rate of inflation is much higher. For example, the official inflation rate may not consider housing, healthcare, and education costs, among other things.
Another way governments manipulate inflation figures is by changing the components and weightage of the items in the inflation basket. The government can use items that have lower inflation rates to reduce the overall inflation figure, even though other essential items are increasing in price much faster. This method allows the government to report lower inflation rates, making the economy appear more stable than it is.
The impact of inflation is significant, particularly for low and middle-income earners who spend a larger portion of their income on basic needs like food, housing, healthcare, and education. If the government fixes the inflation rate falsely, people’s purchasing power can decrease quickly. Changing prices can make it challenging to maintain a household budget, and it can cause people to go into debt.
In conclusion, Governments worldwide have been manipulating inflation figures, making it hard to believe these figures are accurate. This leads to confusion amongst citizens and affects their decision-making processes. The government should provide accurate inflation figures to the public, keeping in mind the citizens’ welfare. Unless the government provides accurate economic figures, it is challenging to trust them, and leads to a situation where inflation is worse than government lies claim.
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