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HomeNewsArchives6 PERCENT INFLATION PROJECTED IN V.I. THIS YEAR

6 PERCENT INFLATION PROJECTED IN V.I. THIS YEAR

Nov. 5, 2001 – Projections indicate that inflation in the territory will be nearly double that of the mainland this year, according to Lauritz Mills, director of the Economic Research Bureau.
"But we don't know what will happen now," she said, referring to the impact the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon will have on the figures.
Mills expects to see a 2001 inflation rate of 6 percent in the territory, compared to the projected rate on the mainland of 3.4 percent, the same as last year. She said the Virgin Islands is in the ballpark with Puerto Rico, which is projected to see a rate of 6.8 percent this year, up from 6.4 percent last year.
Since this is the first year the territory has kept track of inflation through the consumer price index, there are no figures for previous years available.
Mills is projecting that what cost the territory's residents $1 last January will cost $1.03 by the end of this year. She said it appears that costs are rising faster in the territory than on the mainland. V.I. retailers historically have complained of high costs of shipping and insurance and the requirements that they pay excise taxes on some goods and a 4 percent gross receipts tax on sales. However, Mills noted that a lack of competition also can drive up prices.
The Economic Research Bureau is tracking the costs of items in its "consumer price index basket" — for food and beverages, housing, apparel, transportation, medical care, recreation, education and communication. Overall, prices in the V.I. "basket" went up by 0.8 percent in September, compared with 0.1 percent in August. Prices for all other goods and services went up 0.9 percent in September after having decreased by 1.5 percent in August. The bureau attributed this difference to an increase in the cost of large household appliances.
In most categories in the consumer price index basket, the changes up and down were small. Medical costs went up 1.5 percent, which Mills said came about through increases in the costs of non-prescription drugs, medical lab fees, medical specialists and dental care. This increase came on the heels of a 1.7 percent increase the month before.
Food and beverage costs went up 0.7 percent in September. Mills said higher prices for fresh fruits and vegetables, meats, poultry, fish and eggs accounted for the increase. "They went up on the mainland, too," she said.
Mills said that when PriceSmart opened its doors on St. Thomas, food and beverage prices in other stores dropped initially because of the competition but have since inched back up.
Higher automobile insurance costs in September accounted for an increase of 0.5 percent in the transportation index after prices had dropped in each of the three preceding months.
The housing index remained unchanged in August and September.
The apparel index fell by 1.6 percent in September, following an increase of 0.3 percent in August.
The only large increase — 8.2 percent — in September came in the cost of recreation, which Mills said reflected seasonal prices changes. This followed an increase of 11.5 percent in August. Higher rental prices for equipment such as personal watercraft accounted for both increases, she said.
Mills said the Economic Research Bureau began collecting consumer price index data in January. Staff members visit a variety of stores once a month on St. Thomas, St. John and St. Croix. "This was never done before," she said.
The bureau released its first monthly report in August. Mills said the reports can help residents keep track of prices trends. In the future, she said, the plan is to release reports on a quarterly basis. But in the interim, she added, available information will be accessible to people who need it.

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Nov. 5, 2001 - Projections indicate that inflation in the territory will be nearly double that of the mainland this year, according to Lauritz Mills, director of the Economic Research Bureau.
"But we don't know what will happen now," she said, referring to the impact the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon will have on the figures.
Mills expects to see a 2001 inflation rate of 6 percent in the territory, compared to the projected rate on the mainland of 3.4 percent, the same as last year. She said the Virgin Islands is in the ballpark with Puerto Rico, which is projected to see a rate of 6.8 percent this year, up from 6.4 percent last year.
Since this is the first year the territory has kept track of inflation through the consumer price index, there are no figures for previous years available.
Mills is projecting that what cost the territory's residents $1 last January will cost $1.03 by the end of this year. She said it appears that costs are rising faster in the territory than on the mainland. V.I. retailers historically have complained of high costs of shipping and insurance and the requirements that they pay excise taxes on some goods and a 4 percent gross receipts tax on sales. However, Mills noted that a lack of competition also can drive up prices.
The Economic Research Bureau is tracking the costs of items in its "consumer price index basket" -- for food and beverages, housing, apparel, transportation, medical care, recreation, education and communication. Overall, prices in the V.I. "basket" went up by 0.8 percent in September, compared with 0.1 percent in August. Prices for all other goods and services went up 0.9 percent in September after having decreased by 1.5 percent in August. The bureau attributed this difference to an increase in the cost of large household appliances.
In most categories in the consumer price index basket, the changes up and down were small. Medical costs went up 1.5 percent, which Mills said came about through increases in the costs of non-prescription drugs, medical lab fees, medical specialists and dental care. This increase came on the heels of a 1.7 percent increase the month before.
Food and beverage costs went up 0.7 percent in September. Mills said higher prices for fresh fruits and vegetables, meats, poultry, fish and eggs accounted for the increase. "They went up on the mainland, too," she said.
Mills said that when PriceSmart opened its doors on St. Thomas, food and beverage prices in other stores dropped initially because of the competition but have since inched back up.
Higher automobile insurance costs in September accounted for an increase of 0.5 percent in the transportation index after prices had dropped in each of the three preceding months.
The housing index remained unchanged in August and September.
The apparel index fell by 1.6 percent in September, following an increase of 0.3 percent in August.
The only large increase -- 8.2 percent -- in September came in the cost of recreation, which Mills said reflected seasonal prices changes. This followed an increase of 11.5 percent in August. Higher rental prices for equipment such as personal watercraft accounted for both increases, she said.
Mills said the Economic Research Bureau began collecting consumer price index data in January. Staff members visit a variety of stores once a month on St. Thomas, St. John and St. Croix. "This was never done before," she said.
The bureau released its first monthly report in August. Mills said the reports can help residents keep track of prices trends. In the future, she said, the plan is to release reports on a quarterly basis. But in the interim, she added, available information will be accessible to people who need it.