Monthly Economic and Financial Developments, February 2014

Published: Friday March 28th, 2014

Indications are that domestic economic activity remained relatively mild during February, constrained by softness in the key tourism sector—although foreign investment-led activity sustained growth in construction output and related employment opportunities. Consumer price inflation was benign, but featured modest swings within several key components of the Retail Price Index. In monetary developments, weakness in private sector credit kept bank liquidity at above average levels, while ongoing demand for foreign currency to meet current payments led to a contraction in external reserves.

Preliminary data suggest a lacklustre outturn for the tourism sector, reflecting persistent sluggishness in the high value-added stopover visitor segment. Based on a sample of large hotels in New Providence and Paradise Island, total room revenues declined further in February, by 2.8%, partly influenced by weather-related cancellations. This, combined with a modest reduction in available room inventory, led to a 30 basis point drop in the occupancy rate, to 65.6%, with the average daily room rate (ADR) also lower by 0.4% at $250.57.

Consumer price inflation for the twelve months to January—as measured by the Retail Price Index—decelerated to 0.39% from 1.85% in the corresponding period of 2013. In a marked reversal from last year’s 3.09% gain, average costs for housing, water, gas, electricity, water & other fuels—the most heavily weighted item in the Index—fell by 0.67%. Accretions to average costs slowed for food & non-alcoholic beverages, furniture and household equipment, clothing & footwear and transport, by 2.38, 1.92, 0.87 and 0.65 percentage points to 0.51%, 0.46%, 0.07% and 0.65%, respectively. In a modest offset, average price gains accelerated for alcoholic beverages, tobacco & narcotics (by 2.70 percentage points to 4.30%), restaurant & hotels (by 2.26 percentage points to 3.64%), and miscellaneous goods & services (by 0.72 percentage points to 1.35%). In other notable changes, average recreation & culture costs firmed by 0.79%, following a 0.72% decline in 2013, and the rate of decline for average communication costs slackened to 1.78% from a year-earlier 2.82%.

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