Soaring Food Prices Drive up Inflation in Honiara

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Graph shows the Honiara annual inflation rates from January 2015 to February 2018.

SHARPLY rising food prices in Honiara have pushed up Consumer Price Index (CPI) inflation higher to 2.1 per cent in February 2018.

This is the highest recorded since June 2016.

CPI is a monthly indicator of the variation in prices for retail goods and other items.

The basket of goods chosen represents the spending behaviour of the population of Honiara and the resulting CPI is used to calculate inflation.

“The 2.1 per cent increase from 191.1 the previous month to 195.1 was predominantly driven by price increases in the Food, and Transport and Communication sub-sections of the index,” Government Statistician (GS) Douglas Kimi said while releasing the official statistics produced by the National Statistics Office (NSO) on Wednesday 4 April for the month of February 2018.

“The Food sub-index increased during the month by 5.1% to 180.7.

“This was mainly driven by price rises in eggs (9.4%), powdered milk (1.1%), sugar (1.4%), non-alcoholic beverages (0.1%) and fresh fruits and vegetables sold at the Honiara market; most notable were bush cabbage (76.0%), melon (57.7%), green bean (50.8%), spring onion (39.2%), chinese cabbage (38.5%), tomatoes (35.3%), cucumber (30.0%), pawpaw (22.2%), cassava (9.0%), green pepper (111.6%), cooking banana (8.1%) and kumara heaps (2.0%). These outweighed price drops in green and dry coconuts (28.3% and 3.9%, respectively), ripe banana (2.7%), bush lime (25.9%) and fern (10.6%) to result in the rise of the overall food sub-index,” he added.

Other major changes in other sub-indexes include;

Drinks and Tobacco fell 0.6% driven by a 2.5% price drop in betel nut offsetting a 0.3% rise in tobacco.

Housing and Utilities went up 0.3% due to increases of 0.9% and 5.3% in electricity and kerosene prices, respectively.

Graph shows the Honiara annual headline and underlying inflation rates from January 2015 to February 2018.

Household Operations rose 0.2% driven by price increases in household supplies such as bar soap (3.1%) and bleach (4.0%).

Transport and Communications rose 0.7% on account of price rises in petrol and diesel by 3.9% and 7.1%, respectively.

Mr. Kimi said apart from the above, price movements elsewhere in the consumption basket were negligible.

“The overall annual headline inflation rate for the month of February 2018 calculated on a 3 months moving average basis was 3.6%, up 1.1 percentage points from 2.5% the previous month. The February inflation rate is the highest recorded since June 2016.

“The corresponding inflation rates for imported and other items were 2.5% and 5.1%, respectively,” he said.

At the same time Mr Kimi said that the main underlying rates of inflation based on a 3 months moving average for the month of February 2018 were observed between 0.0% and 2.6% while the headline inflation rate was at 3.6%.