According to CBS, in May 2023, the year-on-year inflation had gone down by 1.0 percent. (Seychelles News Agency)
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A stronger Seychelles rupee contributing towards a decline in inflation locally, is one factor that has allowed the board of the Central Bank of Seychelles (CBS) to maintain the Monetary Policy Rate at 2 percent for the third quarter of 2023.
According to CBS, in May 2023, the year-on-year inflation had gone down by 1.0 percent, while the 12-month average rate of inflation was 1.8 percent.
The governor of the Central Bank, Caroline Abel, told reporters that estimated indicators for June show that inflation might go down during the second quarter as compared to the first quarter of the year by 0.5 percent.
Changes in prices locally are linked to non-food commodities which have dropped due to a 1.4 percent decrease in electricity prices, a 4.7 percent decrease in the price of transportation, and a 1 percent decrease in the price of communication, among others.
Abel shared that all this is linked to the fact that “since the end of last year and the start of 2023, we have seen a continuous drop in the price of the dollar, even if in May there was a slight depreciation.”
She said explained that this made it cheaper to buy a U.S. dollar.
“For this year, until June 16 compared to the same period last year, one U.S. dollar has become cheaper by 48 cents, one euro by 78 cents, and one Pound sterling by 1.70 rupees. This is a component that has helped the price of food to become cheaper in our economy,” said Abel.
Another contributing factor is the good performance of the tourism sector, which primarily supports the economy. Tourism remained the main foreign exchange earner, despite a gradual decline in yield from the industry.
As of June 14, 2023, the total number of tourists was higher compared to the same period last year. The growth in visitor arrivals was sustained by the positive performance of the traditional Western European markets – France, Germany, and England – as well as other regions – Russia and Israel.
However, over the same period, tourism earnings are estimated to be lower as a result of a decline in the average yield per visitor.
Abel emphasised the fact that despite the positive notes in the economy of the country, it is important for Seychelles to continuously follow the development in the global economy, especially in countries that are sources for its tourism sector.
“A slowdown or recession in the economic growth of these countries is bad for the local tourism sector. The reality of the war between Russia and Ukraine is also affecting commerce,” said Abel.
