Monthly Economic and Financial Developments, September 2015

Published: Tuesday November 10th, 2015

Preliminary indications are that the domestic economy sustained its mild growth path during the month of September, based on modest gains in tourism output, and on-going foreign investment-led projects which supported construction activity. Amid the downward trajectory in global oil prices, domestic fuel costs continued to moderate over the review period. Monetary sector developments were dominated by the seasonal firming in foreign currency demand, which contributed to declines in both bank liquidity and external reserves.

Provisional data from a sample of major hotels in New Providence and Paradise Island indicated that gains in the high value-added stopover segment supported an expansion in tourism sector performance over the eight months of 2015. Specifically, total room revenue firmed by 2.6%, reflecting increases in both the average occupancy rate, of 3.4 percentage points to 75.7% and in the average daily room rate, of 6.3% ($15.60) to $263.09.

Domestic inflation for the twelve months to August—as measured by the Retail Price Index of The Bahamas—rose by 54 basis points to 1.57%. This out-turn reflected a significant acceleration in price increases for health (by 7.8 percentage points to 9.7%), recreation and culture (by 6.2 percentage points to 8.1%) and furnishing, household equipment & maintenance (by 5.0 percentage points to 5.3%). More muted gains were noted for communication and education, of 2.6 and 2.4 percentage points to 3.3% and 4.8% respectively, and of less than 2.0 percentage points for food & non-alcoholic beverages, restaurant & hotels, clothing & footwear and alcoholic beverages, tobacco & narcotics. In addition, average prices were stable for housing, water, gas electricity & other fuels—the most heavily weighted component—following a 0.9% decline last year. In contrast, inflation slowed for miscellaneous goods and services, to 0.5% from 3.3%, while average transportation costs fell by 3.3%, a reversal from a 4.1% increase in 2014.

Reflecting the sustained falloff in international crude oil prices from the prior year’s levels, the Bahamas Electricity Corporation’s fuel charge decreased by 7.3% to 14.35 cents per kilowatt hour in September—a 46.9% reduction from the previous year. Similarly, prices at the pump trended downwards, with both gasoline and diesel costs falling by 6.1%, month-on-month, to $4.46 and $3.78 per gallon, and more sharply, for the annual comparison, by 16.8% and 24.7%, respectively.

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