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26


Economic Trends by José I. Duarte


GRAPH 1 - Cumulative price changes in each of the Consumer Price Index components between January 2004 and May 2010


(%) 70


60 50 40


20 30


10 0


-10 -20 -30


Food and beverages


Housing and fuels


Health Misc goods and services


Clothing and footwear


Alcoholic beverages and tabacco


Transport Recreation and culture


Household goods and furnishings


Education Communication Price growth Composite Consumer Price Index In ation


There have been plenty of concerns expressed about rising in ation. In this analysis, Macau Business focuses on the behaviour of its main components. We look at the period since 2004, when the  rst casino outside of Stanley Ho Hung Sun’s empire opened in Macau.


GRAPH 1


Based on monthly data from the Composite Consumer Price Index between January 2004 and the most recent  gures in May 2010, the cumulative average price increase has been just over 30 percent. That equates to an average annual change of about 2.6 percent.


Overall, that is not a worrying statistic. However, for most of last year and this year, the consumer price index has risen steadily.


GRAPH 2 - Growth in the Consumer Price Index components, indexed to 2004 prices Housing and fuels


(2004=100) 160


Food and beverages Health


Clothing and footwear Transport Communication Education 140 120 100


The graph shows the goods and services that rose above the average; food and beverages, and housing and fuels are the two biggest increases. Spending here represents a big share of the basket of goods and services the government monitors, and are expenses that affect low-income earners the most. Add health and clothing costs to the food and housing categories and almost two-thirds of the basket’s value is represented. In the same period, two groups of expenditure saw their prices decline: education, a sector heavily in uenced by government subsidies, and communication, where the effects of competition and technological change have been a driving force behind declining prices worldwide.


GRAPH 2 80 2004 2005 2006 2007 2008 2009 2010


GRAPH 3 - Price index growth for major Composite Consumer Price Index components from January 2004 to May 2011


Food and beverages (January 2004=100)


180 160 140


100 120


80


Jan 2004


Jan 2005


Jan 2006


Jan 2007


Jan 2008


Jan 2009


Jan 2010


Jan 2011


Clothing and footwear Housing and fuels Health


Using data for the yearly average for the calendar years in our sample, Graph 2 displays the change within some major goods and services categories over time. A similar pattern to the  rst as mentioned on Graph 1 emerges. Note, in particular, that the cost of food, clothing and health accelerated after 2007. In the same year, education costs began a decline.


GRAPH 3


Based on the monthly data for the major components of the Composite Consumer Price Index, Graph 3 illustrates a big jump in health costs beginning in 2008. They have since settled but continue on an upwards growth path. There has also been a sustained acceleration of food and clothing costs in the second half of the period. Clothing costs, in particular, are showing a strong seasonality in their upward climb. Bucking the trend is housing, which includes fuels, complicating the analysis. It has over time increased much faster at the beginning and stabilised more recently. There are some long-term trends here that justify concern.


JULY 2011


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