The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank yesterday warned Bahamian consumers that inflation will remain “high” in the near-term, and decline more slowly than in other countries, with food and drink prices rising 11 percent over the year to end-June 2023.

The banking regulator, unveiling its monthly economic update report for August, said any inflation reduction for The Bahamas will “lag” and take place over the “medium to long-term” due in part to summer’s soaring Bahamas Power & Light (BPL) bills as the utility sought to recoup previously under-recovered fuel costs.

“As it relates to prices, inflation is projected to remain high in the near-term, although trending downward over the medium to long-term, with a lag, owing to moderating price trajectories in the major trading markets and delayed fuel cost pass-through in domestic energy prices,” the Central Bank said.

“Upside risk to inflation revolves around uncertainty in international energy costs and supply chain shortages, associated with the geopolitical tensions in Eastern Europe.” This means that Bahamian families already struggling with the post-COVID cost of living crisis are unlikely to see much, if any, short-term relief from sustained price increases across multiple basic commodities.

“Average domestic consumer price inflation, as measured by the All-Bahamas Retail Price Index, rose to 5.2 percent during the 12 months to June from 4.4 percent in the comparative 2022 period, explained by the pass-through effects of higher global oil prices and other costlier imports,” the Central Bank added. 

“Leading this outturn, average inflation for recreation and culture accelerated to 17.3 percent vis-à-vis 1.3 percent in the previous year. Further, average costs increases quickened for food and non-alcoholic beverages (11 percent), restaurant & hotels (10 percent), alcohol beverages, tobacco and narcotics (5.4% percent), health (5.3 percent), housing, water, gas, electricity and other fuels (4.7 percent) and furnishing, household equipment and routine household maintenance (2.9 percent).

“Average prices for miscellaneous goods and services firmed by 1 percent following a decline of 1.8 percent in 2022. Providing some offset, average inflation moderated for transport (6.6 percent), clothing & footwear (3 percent), communication (1.7 percent) and education (1.3 percent).”

As for tourism, the Central Bank reported that stopover visitor numbers in August had recovered to 98 percent of pre-COVID levels. “Tourism sector output sustained its robust growth in monthly trends, reflective of healthy gains in both the high-value air component and sea traffic as the demand for travel in key source markets persisted,” the August report added.

“Official data provided by the Ministry of Tourism revealed that total visitor arrivals expanded to 0.74m in August from 0.62m in the corresponding period of 2022. Specifically, the dominant sea segment rose to 620,000 from 500,000 passengers in the prior year. In addition, air traffic improved moderately to 130,000, representing 98 percent of the pre-pandemic high that was registered in 2019.

“Disaggregated by major port of entry, total arrivals to New Providence amounted to 330,000 visitors, the same magnitude as the previous year,” the Central Bank continued “Underlying this outcome, both sea and air traffic firmed to 220,000 and 110,000, respectively. 

“In addition, foreign arrivals to the Family Islands rose more than one-fourth to 370,000 as sea and air arrivals advanced to 350,000 and 20,000, respectively. Further, arrivals to Grand Bahama amounted to 50,000, surpassing the 40,000 recorded a year earlier, as respective sea and air passengers totalled 46,031 and 3,249.

“On a year-to-date basis, total arrivals strengthened to 6.6m visitors vis-à- vis 4.3m in the corresponding 2022 period. Contributing to this outcome, air arrivals increased to 1.3m passengers from one million in the previous year, reflecting gains in all major markets. Similarly, sea arrivals also accelerated to 5.4m from 3.3m visitors in the preceding year.”

As for arrivals traffic at Lynden Pindling International Airport (LPIA), the Central Bank report added: “The most recent data provided by the Nassau Airport Development Company (NAD) indicated that total departures in August, net of domestic passengers, rose by 18.8 percent to 160,000 relative to the same period in 2022. Specifically, US departures grew by 20.1 percent to 140,000, while non-US departures increased by 9.3 percent to 20,000, vis-à-vis the comparative period last year.

“On a year-to-date basis, total outbound traffic advanced by 26.8 percent to approximately 1.2m passengers. In particular, US departures expanded by 26.9 percent to almost one million visitors,compared to the corresponding period last year. Likewise, non-US departures moved higher by 26.2 percent to 20,000 visitors relative to the same period a year earlier.”

When it came to vacation rental properties, the Central Bank said: “In the short-term vacation rental market, data provided by AirDNA also reflected positive trends during the month of August. Specifically, total room nights sold rose to 161,513 from 140,512 in the comparative 2022 period.

“Underlying this outturn, the occupancy rates for both entire place and hotel comparable listings firmed to 55.4 percent and 52.8 percent, respectively, compared to 55.1 percent and 51.9 percent in the previous year. Further, price indicators showed that year-over-year, the average daily room rate (ADR) for entire place listings grew by 8.4 percent to $549.65 and, for hotel comparable listings, by 10.5 percent to $197.71.”

Elsewhere, The Bahamas foreign currency reserves remained stable through August. “During August, external reserves reduced by $6.9m to $2.730bn, notably lower than the $63.3m decline in 2022. Reflective of this development, the Central Bank’s net sales to commercial banks widened to $24.6m from $13.6m in 2022,” the banking regulator said.

“Likewise, commercial banks net foreign currency outflows to their customers increased to $74.6m from $31.6m a year earlier. In contrast, the Central Bank’s net foreign currency transactions with the public sector switched to a net purchase of $18.8m from a net outflow of $54.1m last year.

“Provisional data on foreign currency sales for current account transactions revealed that monthly outflows decreased by $208.4m to $531.9m during the review month vis-à-vis the comparative period of 2022. Specifically, reductions were noted for oil imports, by $68m; non-oil imports, by $59.5m; and factor income remittances by $39.9,” the Central Bank continued.

“Further, ‘other’ current items - primarily credit and debit card financed imports - fell by $39.6m, and travel-related payments by $4m. Conversely, transfer payments rose by $2.5m.”