Record-high oil prices last summer helped cause inflation in the third quarter of 2008 to soar more than 7.4 per cent higher than the previous year.
The Cayman Islands’ Consumer Price Index report for September 2008 released last week by the Economics and Statistics Office shows the Consumer Price Index stood at 159.6 in September, up by 7.4 per cent in comparison to September 2007.
Prices rose steadily over the summer months, with the September 2008 CPI up 2.3 per cent over the June 2008 CPI.
The CPI is calculated when, for one month in each quarter of the year (March, June, September and December), ESO staff collect data on the prices of 661 items from more than 100 establishments on Grand Cayman. Every kind of spending such as weekly supermarket trips, school lunches, and rental payments are included, with a total of about 1,800 prices collected.
The items are assigned weights depending on their importance in the total pattern of consumer spending, which are then combined with prices to compile the price index. It represents the average price of a basket of goods and services during the month in question.
The CPI contains eight major categories of items: food, alcohol and tobacco, housing, clothing, household equipment, transport and communication, education and medical and personal goods and services, which have an aggregated weight of 1,000.
The report for September indicates average prices increased in all major groups except clothing. The price increases were led by housing (11.7 per cent) food (7.7 per cent) and personal goods and services (7.5 per cent).
The report cites a number of factors contributing to the increase in prices.
In the housing group, which comprises 1/3 of the CPI basket, the overall housing price index stood at 163, 11.7 per cent more than the September 2007 level. The increase is attributed to a 17.1 per cent rise in the average cost of utilities and a 10.7 per cent increase in the average cost of rent, maintenance and insurance.
A closer look at utilities prices reveals a 22.7 per cent increase in the price of propane over September 2007, and a 20.2 per cent increase in electricity over that same period.
Rents and mortgages rose by 13.4 per cent over September 2007 and home improvement costs rose 3.8 per cent.
The housing index showed the biggest quarterly jump over June 2008, with an increase of 5.8 per cent over the summer.
Utilities rose 12.5 per cent over the quarter, and rent, maintenance and insurance costs rose 4.5 per cent.
Over the quarter, electricity rose 16.8 per cent, propane rose 4.5 per cent, and water and sewage rose 1.8 per cent.
Average costs for rent and mortgages rose 5.6 per cent, while repair, maintenance and insurance costs rose 2 per cent over the quarter.
The September 2008 food index showed the average price of food increased by 7.7 per cent over September 2007, with the highest increases being 28.5 per cent for oils and fats, 23 per cent for fruits and vegetables, and 10.7 per cent for breads and cereals.
The report reveals personal goods and services rose 7.5 per cent mainly as a result of a 19.5 per cent increase in holiday expenses, an 11.8 per cent increase in gifts and subscription prices, and 5.4 per cent increase in culture pastime and hobby costs.
However, costs associated with personal goods dropped 8.2 per cent, as did home entertainment (-2.1 per cent) and personal services.
The transportation price index increased 5.6 per cent over September 2007, with the average costs of travel rising 8.4 per cent and household vehicles rising 6.1 per cent.
The education and medical index rose 4.6 per cent, with medical care costs rising 7.8 per cent and education costs rising 2.3 per cent.
September 2008’s household equipment index rose 3.7 per cent over the previous year, mainly due to a 7.7 per cent rise in prices of furniture and flooring, and a 4.7 per cent rise in household appliances.
September’s alcohol and tobacco index rose 3.5 per cent over 2007, with an 8.2 per cent rise in tobacco prices and a 2.4 per cent rise in alcoholic drinks.
However, some costs did drop. Clothing prices dropped 5.4 per cent overall over September 2007, with the only increases showing in footwear, up by 4.7 per cent.
Quarterly results also showed that the transport and communication index dropped by 5.6 per cent over the summer.