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COVID-19 related funds boost consumer purchase power for 2nd quarter

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Pago Pago, AMERICAN SAMOA — Millions of dollars in COVID money in the hands of local residents boosted purchase power and was among the contributing factors in the increase in the American Samoa Consumer Price Index (CPI) for the second-quarter of calendar year 2021 —  the period April to June, according to the CPI report, dated July 13th and released early this week by the Commerce Department’s Statistic Division.

The report explained that the cost of goods and services normally purchased by local residents measured by the CPI for the 2nd-quarter registered at 106.9 points - a 1.7% increase from the first quarter of 2021 and creating an Annual Inflation Rate of 3.2%.

Furthermore, inflation usually happens when there is an increase in money supply, higher wages, or implementation of new or changes in taxations.

“The infusion of COVID-19 stimulus economic impact payments of more than $130 million to individuals resulting in higher disposable income, prompted  this local demand-pull inflation, coupled with a rise in oil prices as well as the implementation of a new cigarette tax this quarter,” the report said.

Under the new cigarette law, based on a Fono approved bill signed by the governor on Apr. 8th, the exercise tax increase by 3-cents, from 33-cents to “36” cents per cigarette or cigar and for each 10 grams of smoking tobacco.

According to the CPI report, higher demands for products/services, supply shortages, internal product re-distributions amongst local retail vendors/businesses and higher cost of commodities imported from the US mainland and other countries were contributing factors to the increase.

“This year’s inflation is expected to remain high as more stimulus payment disbursements, tax refunds, federal American Rescue Plan funds disbursements” and the new ASG hourly minimum wage hike of $7.25 per hour — which became effective July 1st — as well as new teacher/general pay-scales implemented or becoming available, the report states.

It also provides a summary of the quarterly movements of major CIP Groups. For example, the Transportation Group recorded the largest quarterly increase of 3.3% due to high costs of unleaded; followed by 3.2% hike in the Medical Care Group — caused by a raise in prices in non-prescription drugs, prescription eyeglass, supplemental income payments, and children’s gripe water over-the-counter medicine.

Third-highest is in the Food Group, which recorded a quarterly increase of 2.2% but since the same quarter of 2020, the overall cost of food has gone up by 6.6%, the report says.  Other major CPI Groups:

• Alcoholic Beverage Group registered a 1% hike in wine

• Housing Group recorded a 0.8% increase due to high cost of construction materials and tools, water, electricity, air conditioners, standing fans and toiletries

• Education and Communication Group slightly increase by 0.5% as the costs of school supplies and postal service charges went up

• Recreation Group dropped by 0.2% due to decreased costs of books and bingo paper

• Other Goods and Services Group went up by 2% due to high costs of cigarettes, hair conditioners, tooth paste, soap, cosmetics and laundry detergent.

Specific details of the 8-page CPI report online at [] or call DOC at 633-5155 extension 258.