Increase of 0.7 percent in Cayman over the year
Consumer prices in the Cayman Islands increased by a mere 0.7 percent during the one year period between June 2013 and June 2014. However, the average inflation rate obscured price hikes for restaurants, transportation and household equipment.
“The inflation rate is partly the result of a 15.8 percent increase in the cost of accommodation services, most likely due to robust demand for tourism services,” said Minister for Finance and Economic Development Marco Archer. “However, the inflation rate in the second quarter is lower than the 2.3 percent estimated for the first quarter of 2014.”
A decline in the housing and utilities price index contributed to the lower inflation rate in the second quarter. Imputed rentals for owner-occupied housing fell by 3.2 percent.
While most residents would have been unaffected by higher hotel costs, not everyone benefited from the offsetting decline in the cost of rental accommodation either.
However, the lower average cost of electricity, gas and other fuels (-1.2 percent) could be felt universally.
Restaurants, in turn, became more expensive with a 7.3 percent price increase, and household equipment prices also rose by 7.5 percent. Other cost drivers included transport services (7.7 percent), the purchase cost of vehicles (7.1 percent) and education (1.4 percent).
Food prices rose by 2.4 percent during the 12 month period, with fish and seafood (7.1 percent) and meat (5.7 percent) becoming significantly more expensive.
From the first to the second quarter pricing trends reversed somewhat. Overall the quarterly inflation growth appeared benign (0.2 percent) but rental costs were 1.2 percent higher than in the first quarter and electricity, gas and other fuels were also more expensive (2 percent).
The prices of clothing increased more significantly during the quarter (0.9 percent) than during the preceding 12 months (0.6 percent). Average consumer price hikes in the second quarter were tempered by the cyclical drop in hotel room rates for the low season (-41.8 percent).
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Two sides to every view, if you assume that most rental property is owned locally, and most renters are guests, then a reduction in rental costs would see less money being drawn into to the local economy for the owners. A reduction in costs of rental property is good for guests, and may translate into more disposable income, but bad for the owners. If the owners are overseas then scratch that theory!