Nominal and Real Prices

[Avinasshini Seran]

Hi all,

Just wanted to clarify the methodology we used to project prices: we have obtained nominal prices (national average retail prices that existed 2013-2020, please see file attached [Source: https://kenya.opendataforafrica.org/]), then projected them to 2050 using moving averages, and finally deflated them back into real 2020 values for MUSE using the inflation rates for the corresponding years. 

Please could you let us know if this is the wrong approach/understanding or if we are interpreting the retail prices incorrectly? 

Thanks so much!

Best,

Mia and Avi

[Alexander Kell]

Hi both,

So it depends on the price scenarios you want. Adam mentioned that it might be worth looking at the "World Energy Outlook" for some future price data. That might be better than projecting your own using moving averages.

If you want to use moving averages (which is fine and your call) then you can probably just remove inflation from the years that you already have and then project forward. Then you wouldn't need to remove future inflation, which is uncertain.

Thanks,

Alex

[Avinasshini Seran]

Understood, thank you!