Senate committee learns that inflation seems to have peaked
Pago Pago, AMERICAN SAMOA — For the first three quarters of calendar year 2022, “inflation in American Samoa has been in the double digits, peaking in the 3rd [quarter] at 13.5%,” according to the Fourth Quarter 2022 Consumer Price Index (CPI) report released this week by the Commerce Department’s Statistics and Analysis Division.
For the 4th quarter - October to December 2022 — inflation declined by 3.8 and now measures at 9.7%, the CPI report said.
It explains that following the “influx of new supply of money” — such as tax credits, P-EBT, and other stimulus checks — “consumer purchasing power seems sufficient to meet the increase in local retail prices,” it says.
“As a result, the Territory technically experienced a period of deflation” in the 4th quarter, according to the CPI report, which was also shared with senators on Monday this week during a Senate committee hearing over public complaints on the high cost of living in the territory, especially food commodities.
Chief Statistician, Meleisea Vai Filiga, who is also DOC assistant deputy for Statistics & Analysis Division provided copies of the CPI report to the committee, which was also informed of the DOC’s role — as outlined in local law — to conduct research and review the costs of living every quarter. And this responsibility began in 1974 and continues to the present day.
He informed senators that towards the end of 2021, the territory saw the cost of living starting to increase and reached 9.7%. And by the second quarter of 2022, it jumped to 11.6% and peaked in the third quarter at 13.5%.
Although inflation decreased in the 4th quarter of last year, Meleisea said that the numbers are still high as compared to previous years.
According to DOC information, about 1,100 prices are collected during the middle month of each quarter for computing the CPI. The total number of retail outlets that provide prices to the Statistics Division data collectors each quarter is more than 125, ranging from major retailers and grocery stores to a variety of services establishments such as gas stations and snack bars.
“Point of Interest” cited in the CPI 4th Quarter Newsletter, also released this week, reiterated that local inflation has finally come down from double digits at the end of 2022. It also says that food is the highest expenditure group followed by Housing and Transportation.
“Changes in the top three groups affected the overall rise and fall in cost of goods and services. These changes were driven by the global cost of fuel and oil, the COVID-19 pandemic, the 2022 Russian invasion of Ukraine and supply chains,” it says.
Meleisea shared similar data during his testimony before the Senate committee summarizing for senators the contributing factors to the high cost of living and inflation. And these factors affect many aspects of life in the territory, such as food since 80% of American Samoa’s food consumption is imported into the territory from the U.S and other countries.
He points out that with imported food and other goods, the cost of transportation and freight from off island is added on to the price of goods sold to consumers.
Meleisea emphasized to the committee that American Samoa operates under the American system of “free enterprise” as everything “is based on supply and demand,” and how fast people purchase goods and services.
He explained that “free enterprise” is based on competition, and when there is more competition, the cost of goods go down.
Additionally, there is no provision of the law, used by Statistics and Analysis Division, that gives DOC any authority to carry out, “what is called ‘price control’.”
Sen. Togiola T.A. Tulafono pressed Meleisea as to whether there is a law that authorizes any specific ASG agency “to control” the cost of goods imported and sold in the territory.
Is there any law pertaining to “price control?” Togiola asked and Meleisea responded that to his knowledge there’s none.
Togiola, a former governor, recalled that the only imported commodity that he believes that American Samoa has a say in its price is imported fuel and that falls under the purview of the Office of Disaster Assistance and Petroleum Management (OPADM), which sets the maximum allowable price (MAP).
As previously reported by Samoa News, the MAP — effective the 15th of every month — is released by ODAPM. However, the retail price at local gas stations is also beyond the government and ODAPM’s control. The MAP also applies to fuel imported by the American Samoa Power Authority.
During the committee hearing, Sen. Malaepule Saite Moliga said that when the price of goods decreases in the U.S, it doesn’t reflect right away in the territory. He cited for example, the cost of a bag of cement that sold at about $20 last year and up to now, that businesses are still selling at the same price — between $18 to $20.
Meleisea responded that it takes more than 3 months for that drop in U.S. prices to be realized here.
(The CPI 4th Quarter report, shows that the average price of a 40kilo bag of cement was $16.64 in 2022.)
Sen. Magalei Logovi’i points to the drop in inflation in the U.S — down to about 6.5% — as reported by U.S news outlets. He queried as to when such decrease will be realized here.
Meleisea reiterated that it takes over 3 months. He went on to explain briefly the difference in formula that the U.S. and American Samoa use to calculate the inflation rate.
He noted that the CPI is based on consumer spending and in the U.S, the top expenditure is housing while in American Samoa it’s food, followed by housing and transportation.
It’s unclear at this point as to whether the Senate will hold another hearing in the future on this issue, but Samoa News notes that over the years, the Fono has held committee hearings on this same subject matter — the high cost of food.
And it has been emphasized by ASG officials to lawmakers in the past years that with American Samoa operating under the American system of “free enterprise” there is no “price control” law in the territory, only a price gouging one.