Rate of Inflation in the Territory Rises in 2008

~~Adz:Left~~Roadtown; Tortola: Wednesday, 30 July – The consumer price index (CPI) in the Territory increased gradually in the first five months of 2008 according to statistics from the Development Planning Unit (DPU).

The index which measures the average price of goods and services purchased by households is used to determine the rate of inflation, which is basically a reflection of the annual change in the CPI.

The DPU statistics reveal that the inflation rate increased from 5.49 percentage points in January to 6.68 percentage points in May, which means that prices on average increased by 6.18 percentage points so far this year.

The last time annual inflation topped the six percentage point mark was in 1997. Since the start of this decade, however, the annual inflation rate has remained below four percentage points.

The rising inflation rate essentially means that on average prices have increased in the Territory. The food, beverage and tobacco sub-group experienced the biggest increase over the five month period, as the price shift between January and May 2008 was approximately 4.42 percentage points.

There was also upward movement in the clothing and footwear sub-group of approximately 2.83 percentage points over the period under review.

The cost of transportation also increased between January and May this year, fuelled mostly by the rising cost of petroleum products. According to DPU statistics the average cost of gasoline has risen by one dollar since the start of 2008, going from $3.91 per gallon in January, to $4.91 in June. The price of diesel recorded an even bigger increase going from $3.93 per gallon to January to $5.28 in June.

Deputy Director of DPU with responsibility for economic statistics, Ms. Patlian Johnson, told the Department of Information and Public Relations, “the majority of inflation experienced in the BVI is exogenously determined.  We are price-takers and whatever price changes occur outside of the BVI, to a large extent have to be absorbed.”

Ms. Johnson noted that “the increase in inflation is not unique to the BVI.” She elaborated saying “it is a global phenomenon, due to a plethora of factors including rising fuel costs, the global increase in commodity prices and the depreciation of the U.S. dollar.”

Ms. Johnson offered some words of advice for persons residing in the Territory. “Since inflation is basically out of our control, one of the things we have to do is adjust our spending habits accordingly.”

The revelation of inflation and consumer price index statistics come on the heels of efforts initiated by Premier Honourable Ralph T. O’Neal to address the rising cost of living in the Territory. The Premier met with representatives from seven supermarkets last Friday to examine ways to address high prices for basic commodities.

The Development Planning Unit is responsible for acquiring and analysing statistics to facilitate economic planning and analysis. The unit functions under the umbrella of the Premier’s Office.