St. Kitts – Nevis Keeps Inflation Rate Low

Basseterre, St. Kitts – Nevis
March 03, 2008 (CUOPM)

The Federation of St. Kitts and Nevis registered the second lowest rate of inflation for the last nine months of last year, the Eastern Caribbean Central Bank (ECCB) is reporting.

According the Basseterre-based financial institution, the rate of inflation in the member countries of the Eastern Caribbean Currency Union (ECCU), ranged from 1.1 percent in Anguilla to 6.2 percent in St. Vincent and the Grenadines during the first nine months of 2007.

The rate of inflation in the ECCB member countries for the first nine months of 2007 is 1.1 percent in Anguilla; 2.5 percent in Antigua and Barbuda; 3.2 percent in Dominica; 5 percent in Grenada; 2.2 percent in Montserrat; 1.6 percent in St. Kitts and Nevis; 4.3 percent in St. Lucia and 6.2 percent in St. Vincent and the Grenadines.

In Anguilla, which had an inflation rate of 11.4 percent over the first nine month period in 2006, the consumer price index rose by 1.1 per cent during the first nine months of 2007.

The transport and communication sub index, which accounts for 23.5 percent of the total basket of goods and services grew by 5.2 percent, partly reflecting the upsurge in international oil prices and increases in the cost of car batteries and vehicles. Prices in the food sub-index, the highest weighted (32.1 percent), rose by 3.2 percent, attributable to price increases for grocery items especially meat, diary products and vegetables.

Upward movements in the price of private tutoring influenced a 4.6 percent rise in the education sub-index. Increases were also recorded in the sub-indices alcoholic beverages and tobacco, medical care and expenses and personal services. These increases were partially offset by declines in the sub-indices clothing and footwear, fuel and light and household furnishings and supplies.

The 2.5 percent increase in Antigua and Barbuda, was driven by a 5.9 percent rise in the food sub index, reflecting higher prices for lamb, poultry, milk and fruits. The fuel and light sub-index was up by 12.1 percent, attributable to an increase in the fuel surcharge on electricity consumption. The alcoholic beverages and tobacco sub-index rose by 11.0 percent, influenced by higher prices for alcoholic beverages. The household furnishings and supplies sub-index rose by 9.0 percent, on account of price increases for furniture, fixtures and floor coverings.

Dominica’s 3.2 percent price increase was primarily driven by a 4.1 percent increase in the food sub-index, reflecting higher prices for dairy products, particularly milk and cheese, and fruits and vegetables. An increase in import prices largely contributed to the rise in prices of dairy products, while higher prices for fruits and vegetables were due to a fall in domestic supply. Increases were also recorded in the sub-indices fuel and light (15.6 percent), attributable to a rise in the cost of electricity; transportation and communication (3.3 percent),largely influenced by higher airfares and a rise in the cost of land transportation; and alcoholic drinks and tobacco (3.1 percent),as the price of wine rose. Those increases were partly offset by declines, particularly in the sub-indices, medical care and expenses, education, and household and furnishing equipment.

Consumer prices rose by 5.0 percent IN Grenada, during the first nine months of 2007, reflected higher prices for all sub-indices, especially food (the highest weighted sub-index) and fuel and light. The average cost of food items increased by 7.1 percent, largely attributable to higher prices for dairy products following the removal of EU subsidies. There were increases in the sub-indices fuel and light (12.2 percent) and transport and communications (5.7 percent), reflecting higher costs of petroleum products and electricity services as a result of rising international oil prices. Among the other sub indices, price increases were also reported for medical care and expenses (5.4 percent) and education (5.1 percent).

In Montserrat, where the rate of inflation was 2.2 percent, the prices in the food sub-index, the largest weighted, rose by 2.8 percent, mainly attributable to increases in the prices of poultry, diary products and vegetables. Higher costs of petroleum products, resulting from upward movements in international oil prices, led to increases in the services sub-index (3.6 percent) and the gas, electricity and water sub-index (5.0 percent). Increases were also recorded in the sub-indices household goods (1.4 percent) and alcohol and tobacco (0.7 percent). There were no movements in the rent and clothing sub-indices during the review period.

In St. Kitts and Nevis, the 1.6 percent increase was driven by higher prices for food, clothing and education. The food sub-index, the largest weighted in the basket of goods and services, rose by 3.9 percent, partly associated with price increases for meat products and vegetables. On average, prices in the clothing and footwear sub-index rose by 3.4 percent, reflecting higher prices for female suits, dresses and men’s pants. The education sub-index grew by 3.0 per cent on account of increased prices for computer equipment.

St. Lucia’s 4.3 percent inflation for the first nine months of 2007 was led by an 8.3 percent rise in the food sub-index, which has the largest weight in the goods and services basket. Of the food sub-index higher prices were recorded for fruits (22.7 percent), tubers (17.9 percent), reflecting a shortage of some agricultural produce as a result of hurricane damage. Increases were also recorded in prices of and milk and dairy products (17.3 percent), associated with a rise in import prices. Price increases were also recorded for fuel and light (7.3 percent), and alcoholic beverages and tobacco (3.3 percent). In contrast prices for medical care and health fell by 1.2 percent, reflecting lower costs for medical products.

St. Vincent and the Grenadines inflation went up 6.2 percent. The food sub-index, which carries the largest weight in the basket, rose by 6.2 percent attributable to increases in the prices of fish, meat and dairy products. The clothing and footwear sub-index rose by 14.7 percent on account of higher prices for some clothing items. Increases were also recorded for transport and communications (4.8 percent) and fuel and light (4.4 percent), attributed in part to high and rising international oil prices and a rise in the fuel surcharge.

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