Seychelles’ year-on-year inflation going down

August 8, 2023

(4 minutes read)

The annual year-on-year inflation rate of Seychelles has gone down to -1.3 per cent, compared to 2.05 per cent in the same month (June) of 2022. The figure, which was published by the National Bureau of Statistics (NBS) as part of the Consumer Price Index (CPI) recently, shows that the core inflation index fell by -0.44 per cent over the same period from June 2022 to June 2023.

The CPI measures the change in the price of goods and services that households pay for the purpose of consumption. To track the change in price over time, a basket of goods and services is used and classified into three main groups – fish, other food, and non-food items. Each category has a specific weight, which is derived from the results of the Household Budget Survey (HBS) and it is determined by how much people are spending on each commodity or service to the total expenditure incurred by households on commodities.

Non-food items make up the biggest weight in the basket at 85 per cent, with other food at 14 per cent and fish at 1 per cent. The non-food category includes items such as housing, water and electricity, transportation, communications, alcoholic beverages, and household equipment. As of June 2023, the inflation rate for this category was 1.5 per cent compared to 6 per cent in 2022.

The biggest drop in inflation came from transportation costs, which dropped from 11.1 per cent in June 2022 to 0.6 per cent last year. Since the non-food group makes up the most weight in the basket when the price of commodities in that group increases or decreases, it will have an impact on inflation accordingly.

In the other food group, the inflation rate in June 2022 was 6.1 per cent, while in June 2023 that stood at 1.1 per cent. Here the biggest drop in price was seen in milk, cheese, and eggs, from 7.9 per cent in 2022 to 0.1 per cent in June 2023. The NBS has undergone a re-basing exercise in 2021, where they had to revise the basket to make it more representative of the realities of today. Different items are added to the basket, such as more hybrid cars, package holidays, as well as non-dairy items like almond and soy milk. The drop in inflation or deflation as it is called, is positive for the country, although it is still way off the lowest rate of -5.54 per cent, recorded in March 2010.

Seychelles’ highest inflation rate was recorded in December 2008 at 63.25 per cent at the height of the global financial crisis. This was a month after the island nation embarked on a macroeconomic reform programme with the help of the International Monetary Fund (IMF) to primarily address the serious balance of payments and external debt difficulties.