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Consumer price index shows steady decline in prices

Following a period of steep price increases due to the increase in value-added tax (VAT) during the second quarter, consumer inflation started to level out at the end of 2018.

The All Bahamas Consumer Price Index (CPI) showed a steady decline in prices over the last four months of 2018 from its peak of 106.96 in July, as the CPI for December stood at 105.98.

The data released by the Department of Statistics this week also showed a firming, and in some cases lowering, of the prices of basic goods and services.

For example, CPI for food and non-alcoholic beverages in December was 107.93, compared to 111.90 recorded in July. The CPI for clothing and footware settled to 114.85 in December, down from its high of 107.38 just five months earlier.

The Central Bank’s most recent Quarterly Economic Review attributed the changes in part to “the pass-through effects of the increase in the VAT rate, coupled with the rise in international oil prices in earlier periods”.

“Inflation, as measured by the Retail Price Index for The Bahamas, quickened to 2.3 percent over the twelve months to November 2018, from 1.4 percent in the previous year. Reflecting this development, average consumer prices firmed for the categories food & non-alcoholic beverages, and for furnishing, household equipment & routine household maintenance, by 2.5 percent, and 0.1 percent, in contrast to respective declines of 0.5 percent and 0.8 percent a year earlier; and for uncategorized goods and services by 1.8 percent, vis-à-vis a reduction of 0.6 percent last year,” the review points out.

“In addition, inflation quickened for transportation (by 3.5 percentage points to 5.1 percent), and restaurant & hotels (by 3.4 percentage points to 4.5 percent), with smaller gains being recorded for recreation & culture, and health.

“In a slight offset, inflation rates slowed for housing, water, gas, electricity & other fuels — the most heavily weighted item on the index — and alcohol, tobacco and narcotics… In addition, average costs for communication and education reversed to declines of 0.8 percent and 0.7 percent, from respective increases of 3.5 percent and 0.3 percent in 2017. Further, the average decline in clothing & footwear costs widened to 1.5 percent from 0.7 percent.”

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