Last year’s Consumer Price Index rose 4.1 per cent over the figure in 2007, with food and household equipment leading they way in price increases.
The Cayman Islands’ Consumer Price Report for December 2008, released last week by the Economics and Statistics Office, showed 2008’s average Consumer Price Index stood at 153.7 compared to the average CPI for 2007 of 147.7.
The good news, however, is that inflation slowed in the fourth quarter of 2008, actually falling 3.2 per cent from the previous quarter.
The single largest price increase within the CPI basket of goods was found in the food category, where oils and fats went up 24.9 per cent over 2007, followed closely by fruits and vegetables, which rose 23.5 per cent over 2007. Overall food costs went up 7.4 per cent over 2007.
By category, the largest price increase for the year occurred in the in the household equipment category which includes furniture and appliances, which went up by 11.4 per cent over 2007. Cost increases in that category continued in the year’s final quarter, jumping 4.9 per cent over the same quarter in 2007.
Other categories which showed notable CPI increases included alcohol and tobacco, which jumped 4 per cent over 2007; and the housing price index, which rose 2.9 per cent.
The housing price index comprises one third of the CPI basket of goods. Its rise in 2008 was attributable to an increase in the average cost of rent, maintenance and insurance of 5.4 per cent over 2007. The Consumer Price Report showed rents and mortgages up by 6.4 per cent, and home improvement by 3.9 per cent.
These housing price increases were counterbalanced by a decrease in the average cost of utilities by 8.4 per cent over the year, including an average drop of 6.6 per cent in the cost of electricity over the year.
However, the quarterly figures in the report show consumers were subjected to large fluctuations in prices within the housing category over the course of 2008.
Between September and December, the report reveals the housing index dropped by 10 per cent, which included a decrease of 7.8 per cent in areas associated with rent, maintenance, and insurance.
Most notably, utilities dropped 19.6 per cent in the fourth quarter. The most marked change was in electricity prices, which dropped a whopping 27 per cent in the quarter. This was in stark contrast to the previous quarter when electricity rose 16.8 per cent.
The Consumer Price Report also shows the transport and communication category, which includes vehicle costs and travel, dropped 4.1 percent in the fourth quarter. This change was dominated by a 4.7 per cent drop in household vehicle costs, which is weighted heavily on the cost of fuel and reflects the fact that gasoline prices decreased significantly over the quarter.
The CPI is calculated when, for one month in each quarter of the year, Economics and Statistics Office staff collects data on the prices of 661 items from over 100 establishments in Grand Cayman. Every kind of spending such as weekly supermarket trips, school lunches, and rental payments are included, with a total of approximately 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 any one month.