The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday predicted that The Bahamas is now “closer to the peak, if we have not yet seen it”, of inflationary pressures that have driven the post-COVID cost of living crisis.

John Rolle, speaking at the regulator’s 2023 first quarter economic briefing, said signs of pricing pressures easing in the US and other major world economies will eventually translate to The Bahamas after a time lag given that this nation imports virtually all it consumes.

“We cannot say at the Central Bank whether that has peaked yet,” he replied in response to this newspaper’s questions, “but what we can say is that to the extent there are signs of easing or moderation in the US and other countries, that means the levelling off and eventual decline in The Bahamas will not be far behind.

“I think that’s important, and we have started to see in the US some easing. Additionally, there is still a lot more by way of easing of inflation that everyone would like to see, but we think we’re closer to the peak if we have not yet seen it.”

The Central Bank, in its monetary policy committee (MPC) briefing for the 2023 first quarter, said: “During the 12 months to January 2023, inflation accelerated to 5.7 percent from 3.2 percent in the same period of 2022 led by restaurants and hotels costs, followed by transportation.”

And the Bahamas National Statistical Institute, in its recent February 2023 consumer price index, said: “ The monthly inflation rate in The Bahamas, which represents the overall change in prices, for 2023 decreased by 0.1 percent when compared to January 2023. This decrease is reflected in the overall price of items purchased by the average consumer during this period.

“This February 2023 decrease followed a 0.1 percent decrease between the months of December 2022 and January 2023. The category of miscellaneous goods saw a decline of 3.4 percent when compared to the previous month. The food and non-alcoholic category also recorded a decline of 1.1 percent. Meanwhile, over this same period, health services saw an increase of 2 percent for the month of February.

“On a year-over-year basis, the consumer price index (CPI) rose 5 percent over the same period last year in 2022. The major categories that contributed to this rise included recreation and alcoholic beverages along with food and non- alcoholic beverages with increases of 20 percent, 11 percent and 9 percent respectively.

“Diesel prices were up 20 percent, and gasoline rose 9 percent compared to this period in 2022. However, compared to January 2023 diesel prices declined by 2 percent while gasoline prices increased 6 percent for the month of February 2023.”

Elsewhere, the Central Bank’s lending conditions survey for the 2022 second half revealed that lenders continued to cite “high debt service ratios (DSR), delinquency in prior loans, underemployment and no collateral as top reasons for rejections” of new credit applications during the period.

The regulator said: “Some 16,037 applications were received during the review period, higher than the second half of 2021 by 12 per cent. The majority of applications, 83 percent, were processed in New Providence. Consumer applications increased by 16.5 percent year-on- year, representing 92 percent of total loans processed. Over the same period in 2021, the approval rate firmed to 83.2 percent.

“Mortgage applications contracted by 22.2 percent year-on-year. Relative to the last half of 2021, the approval rate for this category rose by 4.3 percentage points to 37.9 percent. Commercial credit requests fell by 14.1 percent year-on-year, attributed to reduced demand in New Providence. Comparable to the second half of 2021, the approval rate rose by 8.3 percentage points to 90.6 percent.”