Fuel hikes only decrease inflation

  • 27 Apr 2007 16:11:20 GMT

    If fuel price hikes decrease inflation, increase fuel prices by 20% then inflation of 20% will be 0%!!

    What a cockeyed economic theory! Thenuwara also must be another MR stooge.

  • 27 Apr 2007 22:45:36 GMT

    [Fuel hikes only decrease inflation ]

    This is a new theory. this will win the next Noble prize for economics.

    [ `Maintaining subsidies causes a large impact on the inflation because the government has to borrow money,` Dr. Thenuwara said. ]

    EVen the UNITED STATES and almost every country uses SUBSIDIES.

    If you compare taxes paid by civilians and businesses, businesses are aaways subsidized.

  • 28 Apr 2007 04:35:38 GMT

    Truth!!

    [ Fuel prices go up again in Sri Lanka

    Friday, April 27, 2007, 19:21 GMT, ColomboPage News Desk, Sri Lanka.

    Apr 27, Colombo: The prices of petrol and diesel have been increased in Sri Lanka by one rupee and two rupees respectively with effect from midnight today (27).

    Both fuel companies, Lank-Indian Oil Corporation (LIOC) and Ceylon Petroleum Corporation (CPC) have increased the prices.

    The price of a litre of Lanka auto diesel and Lanka super diesel went up by Rs 2, while Petrol 90 Octane and Lanka Petrol 95 Octane by one rupee. A litre of Lanka auto diesel will now be sold at Rs 65, Lanka super diesel at Rs 70.30, while Lanka Petrol 90 Octane now will be sold at Rs. 105 and Lanka Petrol 95 Octane at Rs.108

    ]

  • 29 Apr 2007 18:03:09 GMT

    [What a cockeyed economic theory ]

    Yes indeed!!

    [ Thenuwara also must be another MR stooge ]

    Any body who is some body in the present setup is a stooge.

  • 29 Apr 2007 18:41:47 GMT

    [Thenuwara said that would not be so as the fuel hike would only bring down inflation because it would reduce government borrowing money to subsidize fuel and electricity. ]

    LOL LOL.. This is one of the BEST i have ever heard so far. Motta Ralas PUNNAKKU EATING Hooters must be having a FEST with this new PUNNAKKU theory.

    All i have to say is - dead PEHs, eat my friends, just share with all the PEHs. A Few people should not eat what is meant for ALL the PUNNAKKU eating HOOTERS!!! :) :)

  • 29 Apr 2007 22:39:14 GMT

    My initial thoughts were similar to the others here, that this theory is quite farcical (word in vogue after the WC final!) But at closer examination it might have some validity (but exactly for the opposite reasons that he is putting forward,) if certain condition are met.

    For example ( if all other factors are kept equal ),

    If the budget deficit due to the fuel subsidy is met by printing money - which I suspect, is what the government is doing - then that will surely lead to inflation. So, if the subsidy is reduced and the money supply is not increased by a corresponding amount will have less pressure on inflation.

    Also, if no new money is printed and the money supply is kept stable then the government will have to compete with the private sector to borrow money - which this Central Bank guy is alluding to - to meet the budget deficit, which will have upward pressure on interest rates, which in turn will have downward pressure on inflation.

    Although, high fuel prices and high interest rates will be a double whammy on the `common man.` But he will have `theoretical` low inflation to crow about! Who cares a prune about the SL `common man,` anyway?

    What do you guys think? Lets argue this out.

  • 30 Apr 2007 23:28:00 GMT

    HGB,

    Fuel subsidy is only in the books mate. Government yet to pay IOC and Cepetco. Subsidy shouldn`t have any effect on the economy.

  • 30 Apr 2007 23:32:56 GMT

    I thought you guys were not supposed to question anything GOSL says.

    At this rate its going to snow in SL.