According to

New Caledonia’s retail prices rose just 0.3 per cent in 1998

ITSEE (the ter ritorial depart ment of statis tics of New Caledonia), the Consumer Price Index (CPI) rose by 0.3 per cent in the

year 1998. This rise follows an increase of 2.0 per cent in 1997 and 1.7 per cent in 1996.

During the last 10 years (1989-1998), the CPI rose by 25.5 per cent, that is, at an average annual rate of 2.3 per cent.

The 1998 result is the best obtained in New Caledonia since 1986 when the CPI decreased by 0.6 per cent, and one must go back to 1961 to observe an annual inflation rate inferior to 1.0 per cent. The main explanations of the 1998 good result have to be sought in several converging factors.

New Caledonia is importing mainly from Europe, and espe cially from the European Union to which she has a statute of OCT (overseas country and territory).

New Caledonia is benefiting from the low inflation rate observed in France and in the European Union (less than 1.0 per cent). Since 1949, New Caledonia’s currency (French Pacific Franc) has been linked to the French Franc by a fixed parity. In 1998, this link guaranteed stability for the exchange rate against the other European currencies. The depreciation against the French Franc (and therefore against the French Pacific Franc) in

1998 of several major curren cies has reduced the cost of imports from some countries.

This is the case for the Australian dollar and the New Zealand dollar, these countries being third and fourth suppliers

of New Caledonia. The decrease of several major commodities in 1998, especially the oil products, has also played a part in the stability of the retail prices.

Some economic sectors are now experiencing a deep compe tition in the marketplace. This concurrence has a favourable impact on the level of retail prices.

Food prices were up 0.3 per cent in 1998 and the cost of ser vices increased by 0.7 per cent while the manufactured goods (mainly imported) decreased by 0.2 per cent.

The components of the consumer price index have been reviewed in 1992 (the CPI is base 100 in December 1992).

More than 11,000 prices are observed monthly in the urban area of Noumea.

The introduction of the Euro in 1999 will not change any thing to the French Pacific Franc that will be exchanged to the Euro at a fixed rate (8.38 Euros for 1,000 French Pacific Francs).

The inflation rate is expected to be contained again under 2.0 per cent this year. g