JORDAN'S CONSUMER PRICE INDEX FALLS FOR SIXTH STRAIGHT

UNCLAS AMMAN 000877 SIPDIS STATE FOR NEA/ELA AND NEA/EX TREASURY FOR SETH BLEIWEIS E.O. 12958: N/A TAGS: ECON EFIN JO SUBJECT: JORDAN'S CONSUMER PRICE INDEX FALLS FOR SIXTH STRAIGHT MONTH REF: A. Amman 193 ¶B. 08 Amman 2354 ¶1. (U) After seeing prices peak last September with double-digit inflation, Jordan has now watched its consumer price index (CPI) fall for the sixth straight month and the March 2009 CPI is .5% lower than March 2008 (ref A). Jordan's consumer price index has four main categories (food, clothing, housing, and other goods and services),and each category has multiple sub-categories. Although prices went up for food (3.9%) and clothing (7.6%),together they represent a minority percentage of an average household's expenditures and the increases were insufficient to counteract decreases in housing costs (-3%) and other goods and services (-5.4%). In addition, there were steep declines in the subcategories of vegetables (-12%),fuel and electricity (-16%),and transportation (-17%). ¶2. (U) Consumers continue to complain that except for falling gasoline prices, they have not seen any of the decreases in consumer prices that the government continues to announce. One rental car company sales manager said that it is hard to feel price relief when the prices of so many things, particularly home heating oil, are so high. He estimated that his family spent 10% of his income on home heating this winter. One restaurant chain owner said that although he has seen his energy costs and some food ingredient costs fall, he has not lowered his menu prices after raising them last autumn. He said that the falling input costs would, however, delay any future price increases but that it is rare for a business to actually lower its prices. ¶3. (U) The Jordanian Gas Station Owners Alliance announced on April 13 that it expects gasoline prices to increase 13 - 17% on April 16 as part of the government's monthly world market pricing adjustment (ref B). This anticipated increase would be the first since August ¶2008. 90 octane gasoline prices in Jordan peaked last summer at $.99 per liter but have recently been around $.49 per liter. Visit Amman's Classified Website at http://www.state.sgov.gov/p/nea/amman BEECROFT