Consumer prices in December 2015 Curaçao – Prices stable compared to November; Inflation in 2015 was -0.5 percent
WILLEMSTAD - The consumer price index of Curacao in the month of December 2015 remained stable compared to November 2015.
Measured over the twelve months to December 2015, the price went down by 0.5 percent compared to the same period a year earlier.
The main price change in December 2015 occurred in the spending category "Recreation, Education and Development."
The spending category "Living" and "Transport and Communication" have contributed most to the fall in prices for consumers in 2015, while spending category "Nutrition" has contributed the most to the price increases to consumers in 2015.
This is evident from the data that was announced by the Central Bureau of Statistics (CBS) today.
Price change in Curacao between November and December 2015
The consumer price index (CPI) of the island has remained stable in the month of December 2015 compared to November 2015, i.e. at the level of 123.2.
During the month of December eight of the nine categories of expenditure (almost) were stable in price, "Other" (0%), "Food" (+ 0.1%), "Housing" (+ 0.1%), "Furnishings and Household Goods” (+ 0.1%), "Food and tobacco” (-0.2%)," Transport and Communication" (-0.3%),"Health" (+ 0.4%) and "Clothing and Footwear" (-0.4%).
Only spending category "Recreation, Education and Development" (+ 1.3%) showed a significant price change. This price change is caused by the increase of tariffs for swimming lessons.
Price change in Curacao between December 2014 and December 2015
The consumer price index fell from 124.6 to 123.2, down 1.1 per cent between December 2014 and December 2015. This figure shows that the month of December of last year was 1.1 percent cheaper compared with December of the year before.
Inflation in Curaçao in 2014
Inflation can be defined as a long-term (minimum 12 months) economic process of a general rise in prices, resulting in inflation (i.e. decline in purchasing power of money) and increase in the cost of living. It can be caused by more expensive imports, higher labor costs, higher other operating expenses c.q. production costs, the market forces of supply and demand (scarcity of goods / services), higher profit margins and increase in the money supply in circulation.
The general thought among economists is that inflation in a healthily developing economy is about two percent. A high inflation may adversely affect the purchasing power of consumers, the value of savings and competitiveness compared to other countries. A high inflation may also lead to an increase in interest rates, which lack investment.
Deflation is the opposite of inflation. A slight inflation can boost to the economy, as lower prices encourage buying behavior for a limited period. Sharp deflation or continuing deflation for some years could work however inhibitory on the economy, since consumer his / her delays purchases in anticipation of even lower prices.
In December 2015 the twelve-month average consumer prices in Curaçao were 0.5 percent lower than in December 2014. This means that the inflation rate in December 2015 was -0.5%.
The inflation rate in December 2015 (-0.5%) is also the inflation rate for the full year of 2015. The inflation in Curaçao for the full year 2015 is therefore -0.5 percent. This reflects the decline in the twelve-month average consumer price index of 124.2 in December 2014 to 123.6 in December 2015.
Price change in Curaçao in 2015 by spending category
The deflation rate of 0.5 percent in 2015 is the result of the price development of the nine expenditure categories for 2015.
During 2015, housing costs (-3.3%) decreased due to decreased prices of water (-9%) and electricity (-20%), while the cheaper petrol (-24%), decreased the cost for "transport and communication" (-3%).
Even new cars are part of "Transport and Communication". The average price of new cars (+ 0.1%) in 2015 was virtually the same as in 2014.
As regards the expenditure category "Nutrition", it is striking that almost all food groups became more expensive during 2015.
The price development in Curaçao in 2015 is mainly influenced by three expenditure categories: "Housing", "Transport and Communications" and "Nutrition". The first two have contributed the most to the consumer price declines for the full year 2015, while the latter has contributed the most to consumer price increases. The end result is a slight deflation of -0.5% for the full year 2015.
Inflation in Curacao during the past 20 years (1996-2015)
Over the past 20 years (1996-2015) inflation in Curaçao has had a strong fluctuating image, ranging from -0.5 percent (2015) to 6.9 percent (in 2008), and resulting in an average of 2.4 percent per year. During that period in 2015 was the first time that there has been deflation, so a negative inflation (-0.5%).
Deflation means that the average consumer of goods and services has declined, specifically in 2015 compared to 2014. The consequence of this development the cost of living has decreased and purchasing power has increased. It can be concluded that mild deflation can possibly have a positive impact on the economic development of our country.