Inflation drops below zero |16 June 2020

• Thanks to power and fuel price cuts

Seychelles inflation stands at minus 0.18% according to latest figures released by the National Bureau of Statistics (NBS).

Taken by surprise, many consumers wondered if the unusual figure was arrived at as a result of moments where fish – not bought by largely now-empty tourist hotels – has occasionally become more affordable on the local market.

“Even hired cars, normally out of reach to us Seychellois, have suddenly become available and affordable,” a consumer interviewed by Seychelles NATION volunteered on condition of anonymity.

“Fleets of hired cars are parked at odd corners so the owners are happy to let people hire them cheaply, rather than see them go rusty from disuse,” he said.

However NBS chief executive Laura Ahtime said recently reduced electricity tariffs and lowered fuel costs were the main contributors to record low inflation figures.

She noted that fish prices (as with many other foods – brackets ours) have in fact risen, as the following detailed report shows.

“The drop – which has not been that low before – has been driven largely by the drop in electricity tariffs and fuel prices,” NBS’ chief executive told Seychelles NATION by telephone.

“This is because their weight is significantly higher than the weight of food items.  “Nonetheless, there has been an increase in prices in most of the Coicop making up food. Only the category milk, cheese and eggs recorded a sizeable drop,” she said.

Coicop is the classification of Consumption According to Purpose, published by the United Nations Statistics Division that divides the purpose of individual consumption.

According to the latest Seychelles consumer price index (CPI) in May 2020, the “All items” annual (year on year) inflation rate stood at -0.18% compared to 

2.08% in May 2019. The core inflation index rose by 1.23% over the same period. Month on month, the inflation rate in May 2020 was -0.09% compared to 0.18% in May 2019. The “All items” 12-monthly average inflation stood at 1.12% and the core inflation 1.18%. Increases were recorded in “Fish” (2.59%), “Non-Food” (1.17%) and “Other Food” (0.64%).

The All Items Index in May 2020 stood at 111.67 compared to 111.87 in May 2019. Comparing year on year, this represents an inflation rate of -0.18%. The core inflation index, which excludes fresh fish and energy items (fuel prices and electricity), increased by 1.23% over the same period.

The All Items 12 monthly average inflation stood at 1.12% in May 2020. This is 

measured as a ratio of the average index over 2020.

On a year on year comparison, the “Fish” index stood at 77.65 in May 2020 compared to 85.50 in May 2019 reflecting a price decrease (-9.17%).

The “Other Food” Index stood at 103.29 in May 2020, reflecting a year on year price increase (1.33%) compared to May 2019. Main increases were observed in “Sugar, jam, honey and confectionery” (5.30%), “Meat (Fresh, chilled, frozen)” (4.80%), “Fish (Frozen, smoked, salted)” (3.69%) and “Food products.” 

Whereas the main decrease was recorded in “Milk, cheese and eggs” (-6.09%).

In the “Non-Food” category, the index of 113.69 in May 2020 reflects a price decrease (-0.29%) compared to May 2019. Main decreases were observed in “Housing, water, electricity & gas” (-5.71%), “Clothing and footwear” (-1.20%) and

“Communication” (-0.02%). Main increases were observed in the following categories; “Alcoholic beverages” (5.31%), “Recreation and culture” (4.43%) and “Restaurants and hotels” (3.76%).

An analysis of the contribution to the overall year on year price change by major product groups “Fish” contributed -0.10%, “Other Food” 0.17% and “Non-Food” 

Items -0.25%. This shows that movements in the “Non-Food” category contributed the most to the “All Items” price change in May 2020 compared to May 2019.

The year on year rate of change of the core inflation index stood at 1.23% in May 2020, compared to the “All items” inflation rate (-0.18%).

The CPI measures the rate of price change of a fixed basket of goods and services purchased by Seychelles households. NBS collects about 4,000 price observations monthly across Mahé, Praslin and La Digue.

The CPI is an index or tool which measures price changes in goods and services with reference to a base period for which the index is set to equal 100. Any increase or decrease in this index reflects an increase or decrease in the price of 

the good or service compared to the price in the base period. Rapid increases in the index imply that the market structure is changing. The movement in index from one period to another can be expressed as a percentage change or changes in index points.

The rate of inflation on the other hand measures the rate at which the cost of a fixed basket of goods and services is changing over time. This is usually measured as a ratio of the average index over a twelve month period to the average index of the preceding twelve-month period. 

The core inflation index excludes from the headline CPI, the prices of fresh fish and energy items (fuel prices and electricity), which are most subject to transient shocks (e.g., changes in oil prices and seasonal effects). By eliminating these CPI components, this index aims at capturing the underlying inflationary  pressures in the economy.

Contributed by Agnes Ayieko