It seems that the more inflation in Barbados rises, the less it is referred to by the Central Bank of Barbados.

In fact, after having to correct its numbers for inflation in August, the bank seems wary to boldly go where it happily went before, that is, in predicting in writing what the level of inflation will be for the whole of 2006.

As far as my computer can tell, even the word inflation is used sparingly in the Central Bank of Barbados’ latest review of the economy, published on Monday, Oct. 30. I hope they are not saving it up in the fear that it may have to be heavily employed in the next report.

These are the two mentions my Word Find offered:
Here: “The moving average rate of inflation increased by 3.3 percentage points to 7.2% at the end of June 2006, reflecting broad-based increases in most product categories.”(CB review to Sept. 30, page 4)

And here: “Inflationary pressures are also expected to ease somewhat, though this assumption hinges on the continued moderation of international oil prices as predicted by global analysts.” (CB review to Sept. 30, page 7)

With reference to the first paragraph, it looks as if the bank will have to come up with a new little inflation box in its reports, because the current one only goes as far as 8 percent. This was okay for a long time, because back in 2000, for example, the quarterly inflation rate (the 12-month moving average) was a mere 2½%. Between the third quarter of 2002 and the middle of 2003 it was well below one percent, but a year later it had gone back up to 1/1/2 percent, yet fell once more in late 2004 to around one percent. But by March 2005 it had reached around 2.4% and has kept rising since.

Inflation in Barbados at December last year was running at 6.1%, according to the central bank, and “was estimated to have declined to 5.9%” at the end of March 2006 (page 3, Central Bank of Barbados’ first quarter, dated May 2, 2006).

But as noted above, the bank said last Monday that “The moving average rate of inflation increased by 3.3 percentage points to 7.2% at the end of June 2006, reflecting broad-based increases in most product categories.” (CB review to Sept. 30, page 4).

Does this mean the bank is indirectly restating the inflation rate to the end of March to be 3.9% instead of 5.9%?

One thing that doesn’t seem to have been repeated this time around was any wild prediction about the expected inflation rate for the year. I saw a clip of the bank’s governor, Dr. Marion Williams, from her press conference, stating that if oil prices continue to recede, then so should inflation. But this was a far cry from the bank’s wild prediction five months ago that “Inflation could slow to around 3.5% by the end of the year (meaning 2006), provided that international oil prices stabilize as predicted by the IMF.” (Barbados’ “Review of the Economy for the First Three Months of 2006”, dated May 2, 2006.)

As noted above, all we got in writing this time was that “Inflationary pressures are also expected to ease somewhat” if oil prices continue to fall.

However, not being an economist, I was a little confused by the bank’s statement in this latest report that other factors helped push up the inflation rate. According to the bank (page 4): “Food, transportation, housing and fuel and light prices rose by 6.5%, 10.3% and 12.8%, respectively, while there was a 7.8% decline in the prices of clothing and footwear.”

I’m not sure which of those categories are supposed to be combined, but I’m reading five words and seeing three percentages. I’m sure an economist could figure it out.

I have two problems with this analysis: First, is the bank saying that we can expect food and housing prices also to fall if oil prices do? Second, I’m surprised that the six percent cess tax on consumer imports, including clothing and footwear, has actually caused a decline in prices of such items by nearly eight percent.  I thought the cess was intended to make all consumer imports, especially “brand name” clothes, cost more and thereby reduce demand for them.

According to the bank, retained consumer imports have indeed contracted by nearly 12% for the first nine months of the year over the same period last year, the first time this has happened since 2002, and mainly due to declining imports of vehicles and food and beverages.

And overall, total retained imports also declined, although by just 1.2% over the first three quarters of the year, compared with increases of over 14% for the same period in the previous two years.

So the only way declines in the prices of clothing and footwear could show up in our inflation monitoring is if we are all now buying these items exclusively from the Caricom region, to which the cess does not apply.

Van Heusen, anyone?