Andean Group - July 2009 (ISSN 1741-4466)

The inflation rate is easing, suggesting that demand in the economy is falling as government spending is cut. In the first six months of 2009 consumer prices rose 10.8%, well below the 15.1% registered in the first six months of 2008. The annual rate in June was 26%. In calendar 2008 inflation was 31%.

Crucially, food price inflation is much lower than overall inflation. In the first half of 2009 the index of food prices rose by 4.5%. In the first half of 2008 the same index jumped by 19.3%. The big inflation engines in 2009 have been healthcare and transport.

For the month of June the increase in the CPI index was 1.8%, down from 2% in May and 2.4% in June 2008. It fell in seven of the 13 sub indices (notably transport, home furnishing, restaurants & hotels, utilities, health care, and other services). The indices covering alcoholic beverages & tobacco, food & beverages, and clothing all rose while the indices covering rent, communications, and educational services were unchanged. .

Unemployment: The national unemployment rate was 7.7% in April and 7.8% in May. Just over 1m people are unemployed. From January to May the average unemployment rate was 7.9%. In 2008 the average unemployment rate was 7.4% - it peaked at 10.2% in January and was at its lowest level of 6.1% in November.