US embassy cable - 05PORTAUPRINCE2728

UNCLAS PORT AU PRINCE 002728 
 
SIPDIS 
 
STATE FOR WHA/CAR 
EB/IFD/ODF 
EB/IFD/OMA 
WHA/EPSC 
INR/IAA/MAC 
S/CRS 
TREASURY FOR MAUREEN WAFER 
STATE PASS AID FOR LAC/CAR 
USDOC FOR 4322/ITA/MAN/WH/OLAC (SMITH, S.) 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, PGOV, HA 
SUBJECT:  Haiti: 14.8 Percent Inflation for the Fiscal Year 
 
1.  SUMMARY:  Inflation for September 2005 was 1.38 percent 
(a yearly rate of 17.9 percent).  Inflation for the past 12 
months, coinciding with the Haitian fiscal year and the 
country's IMF program was 14.8 percent, which exceeded the 
IMF and IGOH target of 12.0 percent.  Failure to meet the 
inflation target was due largely to the global increase of 
oil prices, political violence in the capital and the 
lingering effects of Tropical Storm Jean.  END SUMMARY. 
 
Inflation Remains a Problem in September 
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2.  According to just-released figures from the Haitian 
Statistical Institute, overall inflation for September 2005 
was 1.38 percent (a yearly rate of 17.9 percent). 
Inflation for the past 12 months was 14.8 percent. 
 
3.  Much of September's rise was due to increases in rent 
and utilities (3.5 percent for the month), transportation 
(3.4 percent) and health care costs (3.4 percent). 
Petroleum prices, part of the transportation index, were up 
11.2 percent.  The politically sensitive price of food rose 
a modest 0.3 percent for the month. 
 
Failure to Meet the Inflation Target 
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4.  The 14.8 percent inflation rate for the 12 months 
ending September 2005 means that Haiti failed to achieve 
one of the main goals set out for it in the IMF's Emergency 
Post Conflict Assistance (EPCA) program, which ended on 
September 30.  The inflation target was 12.0 percent and 
for much of the year both the Interim Government of Haiti 
(IGOH) and the IMF were confident that the country would 
meet the target. 
 
5.  Failure, however, was due to several exogenous shocks, 
including principally the sharp increase in the global 
price of oil.  Haiti is dependent on foreign oil and price 
increases negatively impact transportation and food prices, 
two of the larger components of the index.  Also 
exacerbating inflation was the political violence in Port- 
au-Prince during FY 04/05 that made it difficult for many 
goods to reach markets, and the lingering effects of 
Tropical Storm Jeanne that struck Haiti in September 2004. 
 
6.  The inflation target in for Haiti's new IMF program, 
EPCA II, which began on October 1, is 10.0 percent.