Although the inflation rate to dropped to 1.7% in the fourth quarter of 2018 compared to the same period in 2017, general price increases of 4.8% in the second and 3.5% in the third quarter meant that inflation kept pace with the forecast economic growth for the year.
The average inflation rate reached 3.3% in 2018, following 2% in 2017 and deflation of 0.6% in 2016. The Economics and Statistics Office estimated in the third quarter of 2018 that Cayman’s gross domestic product growth would hit 3.4% for the year.
The highest price increases in the basket of goods that make up the consumer price index were recorded for food and non-alcoholic beverages, which were on average 4.6% more expensive than a year earlier.
Bread and cereals especially saw significant price growth, of 9.3%. The price of fruit went up by 7.1%; mineral water, soft drinks and juices all were 6.9% more expensive; and vegetable prices grew by 6.8%.
The cost of housing and utilities, which represents nearly a third of the weighted basket of goods in the consumer price index, was the second largest price driver with a 3% increase in 2018.
However, it was mainly the average cost of electricity, which jumped 15.4%, and the cost of water (5%) that caused higher costs, whereas rental costs, housing maintenance and gas prices remained stable, the Economics and Statistics Office report noted.
Health costs rose by 2.1%, largely due to higher prices for medicinal products (14.5%) and pharmaceutical products (4.6%).
The price for clothes, meanwhile, were 2.1% higher, but the cost of footwear declined by 3.3%.
The average cost for the maintenance and repair of personal transport equipment was 10.9% higher than in 2017, the cost of fuels increased by 6.5% and motor vehicles were on average 3.6% more expensive.
In contrast, spirits and alcoholic cordials saw a price decline (8.2%), and wine was marginally cheaper (0.3%) last year.
The statistics office also provided information on Cayman’s core inflation rate, which follows the methodology used by the US Bureau of Labor Statistics and excludes ‘volatile items’ such as food and non-alcoholic beverages, as well as all fuel-related items including piped gas, electricity, motor fuels, fuel oil and other household fuels.
Core inflation, which is used as a measure of price stability, was, at 0.4%, significantly lower in the final quarter of 2018 than the overall CPI inflation rate of 1.7%.
Since 2008, food prices have increased by more than 34%, household equipment by more than 23% and clothing by 22%. However, these and other price increases, like higher costs for transport (20%), education (17.4%) or health (6.7%), were somewhat offset by lower housing and energy costs (-16%) during the period.