SEPTEMBER AND DECEMBER 2009

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CPI Stats

Source: eso.ky, Economics and Statistics Office (ESO) This report presents a summary of the results of the first set of Consumer Price Index surveys conducted by the Economics and Statistics Office using the June 2008-based CPI basket. As reported in January 2009, a new basket for the Cayman Islands was developed based on the results of the 2007 Survey of Living Conditions/Household Budget Survey, which were updated in June 2008. ESO ceased the measurement of CPI using the 1994 CPI basket as of September 2009 to give way to the use of the new basket. This report therefore presents results for September 2009 and December 2009.
 
Overview of the 2008 CPI basket
The final list of consumer goods and services comprising the CPI basket was finalised after eight quarters of surveys, from March 2008 to December 2009. These surveys facilitated the selection of items that are supplied by 186 local outlets in Grand Cayman on a regular or stable basis during this period.
 
The goods and services are classified into 12 divisions using the United Nations’ Classification of Individual Consumption According to Purpose. In all, there are 1,393 items (7th-digit COICOP level) included in the 2008-based CPI basket, classified as indicated in Table 1.

 
Each item is assigned a weight in the basket equivalent to its percentage share to total consumption expenditure valued at prices as of June 2008. These weights are presented by division in Figure 1:
 

 
Annual inflation rates for September 2009 and December 2009
As shown in Table 2, the Cayman Islands went into a deflationary phase in 2009, the first year on record for the country as the average inflation rate for the whole year reached -1.3 per cent. For the last two quarters, the deflation was at its deepest at -2.9 per cent in September 2009 followed by a slight rebound to -0.6 per cent in December 2009.
 
In the third quarter, five divisions were on deflation, led by housing, utilities and fuel (-6.4 per cent). The other divisions that exhibited downward movements were transportation (-8.8 per cent); health (-6.2 per cent); communication (-1.9 per cent) and clothing and footwear (-1.1 per cent).
 
In the last quarter, the price deflation in housing softened to -3.2 per cent while health rebounded strongly to 14.9% along with communication (1.2 per cent).
 

 
Comparative CPI using the 1994 and 2008 baskets
As shown in Figure 2, the two CPI series show the same trend from the period June 2008 up to December 2008, where an upsurge in September 2008 was followed by a dip in December 2008. However, a slight contrast is shown for the subsequent quarters. Whereas, the 2008-based series shows a modest decline, the 1994-based series shows a slight uptrend. Nonetheless, the average quarterly inflation rates for the entire period under review are both negative (-0.075 per cent using the 1994 basket and -0.3250 per cent using the 2008 basket.)
 
The quarterly price changes led to a cumulative change of -0.3 per cent from June 2008 to June 2009 in the 1994-based series as compared to -1.3 per cent in the 2008-based series. That is, the 2008-based series in this period is 1-percentage point lower than the 1994-based series.
 
Broadly, the deeper decline shown by the 2008 series may be traced to housing and utilities, which fell by 5.6 per cent in June 2009 and has a higher weight in the 2008 series, as compared to a decline of 4.8 per cent in the 1994 series.