Consumer price index, 15 December 2008

The consumer price index (CPI) was 124.4 (1998=100) as per December 2008 compared to 121.8 in the corresponding month in the previous year. This is equivalent to a year-to-year growth of 2.1 per cent in December, down 1.1 percentage points from November. The year-to year growth in the CPI-ATE was 2.6 per cent in December 2008 compared with 2.7 per cent in November 2008.

The annual growth in the CPI was 3.8 per cent in 2008, while the annual growth in the CPI-ATE was 2.6 per cent.

Fall in fuel and lubricant prices from November to December

The CPI decreased by 0.2 per cent from November to December 2008. The prices of fuel and lubricants fell by 6.7 per cent and were the largest contributor to the decrease. After a price drop in November, the prices of electricity including transport decreased by a further 2.9 per cent. Clothing and shoe prices fell by 2.1 per cent from November to December 2008, which was a strong decrease compared to the corresponding period in the previous years. The decrease was mainly due to an increase in sales offers on men and women’s clothing.

Food prices rose by 0.9 per cent, and were the main reason behind the decrease. Another important contributor was transport services, where flight prices increased by 8.8 per cent from November to December 2008. The price of books rose by 6.9 per cent, and also dampened the decrease.

The CPI-ATE increased by 0.2 per cent from November to December 2008.

Year-to-year growth was 2.1 per cent

The year-to-year growth rose by 2.1 per cent from December 2007 to December 2008. Food prices increased by 5.3 per cent, and were the most important factor behind the rise in the CPI. Flight and taxi fares were behind most of the increase for the price of transport services, which rose by 13.2 per cent. Other important factors were calculated rent for freeholder, and electricity including transport.

The price of clothing fell by 8.4 per cent, and was the largest contributor to dampening the increase in the last twelve months. The CPI was also affected by the price reduction of fuel and lubricants, audiovisual equipment and telecommunication services.

Lower year-to-year growth compared to November

Year-to-year growth in the CPI fell from 3.2 per cent in November to 2.1 per cent in December 2008. The price of electricity including transport was the most important factor behind the price reduction. From November to December 2007, the price of electricity rose by 13.0 per cent, while falling by 2.9 per cent from November to December 2008. Fuel and lubricants was another important contributor, with a greater price decrease from November to December 2008 than in the corresponding period in the previous year.

The year-to year growth in the CPI-ATE was 2.6 per cent in December 2008, down 0.1 per cent from November. Factors behind this drop include the price of maintenance and repair of housing, which increased from November to December 2007 compared to no change in 2008, and more extensive clothing sales in December 2008 than in December of the previous year.

High annual growth

The annual growth in the CPI was 3.8 per cent, which is the highest since 1990. The price of electricity including transport was the main contributor to the increase, and rose by 26.9 per cent as a consequence of the high price of electricity power. Food was also an important contributor, with an increase of 4.3 per cent. This was mainly due to the higher price of dairy products, bread and corn products. This trend can be explained by the Agricultural Settlement in 2008, but also by higher prices for semi-raw materials. Other important factors that affected the annual growth were the price of maintenance and repair of housing, fuel and lubricants, hotel and restaurant services and services connected to culture and leisure.

Clothing prices fell by 5.0 per cent, and pulled the annual growth in the opposite direction. Price reductions on audiovisual equipment and telecommunication contributed to the dampening of the high annual growth.