Consumer prices increased by 1% in the second quarter of the year compared to the same period in 2019, as higher food and drinks prices were mostly offset by lower fuel and transportation costs.

The Economics and Statistics Office reported that prices increased in nine of the 12 categories that make up the basket of goods and services used to calculate consumer price inflation.

Food and non-alcoholic beverages recorded the highest average price increase of all  categories at 6.0%.

Oils and fats were on average 20.4% more expensive, followed by dairy products and eggs which saw a 12.9% increase. The price of tea, coffee and cocoa rose by 10.7%.

Meanwhile, locally bought clothes were 8.2% more expensive, while hairdressers and nail salons charged on average 7.3% more than in the second quarter of 2019.

However, the collapse in the price of oil earlier this year finally translated into lower fuel prices on island.

The cost of fuel declined 8.6% relative to the second quarter of 2019 and 13.1% between the first and second quarter of this year. Lower fuel costs also meant that electricity bills were on average lower by 4.4%.

In recent years, consumer prices in Cayman experienced a steady increase. After a deflationary period of falling prices in 2015 (-2.3%) and 2016 (-0.7%), the annual average cost of consumer goods and services grew by 2%, 3.3% and 5.7% from 2017 to 2019.

Year-on-year consumer price inflation reached a peak of 8.4% in the final quarter of last year before dropping to 3% in the first quarter and 1% in the second quarter of 2020.

Lockdown effect

The economic upheaval caused by the COVID-19 pandemic since March of this year meant that consumer prices fell on average by 0.9% between the first and the second quarter.

The effects of the COVID-19 lockdown measures and the subsequent economic contraction are, for example, reflected in the lower cost of motor vehicles, which dropped 4.5%.

The cost of rental accommodation, one of the main price drivers in recent years, still increased by 5.2% compared to last year but rents started to come down between the first and second quarter (-0.2%).

Given that the COVID-induced fall of Cayman’s population has flooded the market with second-hand vehicles and vacant properties, a further drop in the cost of rental accommodation can be expected.

Following the collapse of the tourism sector, the cost of accommodation services is down by 9.4% in the second quarter alone.

However, healthcare-related costs, in particular the prices of pharmaceuticals, have gone up both during the past 12 months (9%) and between the first and second quarter of 2020 (5.1%).

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