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Home World Trinidad

Consumers bawling as prices increase

Staff by Staff
June 26, 2022
in Trinidad, World
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Con­sumers are bawl­ing as prices con­tin­ue to soar.

Last week, the Na­tion­al Flour Mills (NFM) in­creased the price of whole­sale flour by a stag­ger­ing 33 per cent and sug­gest­ed a re­tail price in­crease of 28 per cent. In a me­dia re­lease, NFM said if a typ­i­cal fam­i­ly us­es a two-ki­lo bag of Ibis Flour month­ly, this would in­crease from $14.77 to $18.93 or 28 per cent.

This is the sec­ond time since Jan­u­ary that NFM raised their prices.

The sta­tis­tics re­flect the in­crease in ba­sic food prices.

The over­all in­fla­tion rate in T&T from 2014 through 2022 was 2.5 per cent. How­ev­er, the av­er­age an­nu­al in­fla­tion rate un­der the cat­e­go­ry “food” was 4.7 per cent per year from 2014 through 2022.

To give an ex­am­ple, a 2.5 per cent an­nu­al in­fla­tion rate means that—on av­er­age—a dol­lar buys two per cent few­er goods and ser­vices than it did the year be­fore.

Uni­ver­si­ty of the West In­dies (UWI) econ­o­mist Dr Re­gan De­o­nanan in an in­ter­view with the Sun­day Guardian ex­plained how the cost of liv­ing is mea­sured and the abil­i­ty of the Gov­ern­ment to raise wages.

He al­so said in the first three months of 2022, the av­er­age in­fla­tion in food prices was 4.8 per cent com­pared to the av­er­age of 4.4 per cent in 2021 and he ex­pects the sit­u­a­tion to wors­en.

“Food in­fla­tion is ex­pect­ed to in­crease in 2022 giv­en the chal­leng­ing state of the glob­al econ­o­my and our re­liance on im­ports. It is note­wor­thy though that T&T has sus­tained pre­vi­ous years of high food in­fla­tion: ten per cent in 2014, 8.6 per cent in 2015, and 7.4 per cent in 2016.”

Break­ing per­cent­age in­creas­es in­to re­al dol­lars and cents, a look at prices of four ba­sic food items–flour, sug­ar, oil and rice–shows the sharp in­creas­es in prices over a three-year pe­ri­od.

A 1.5 litre of Hap­pi oil was $21.95 in 2020 and in 2022 it jumped to $33.95. A 900 gram Hap­pi sug­ar in 2022 was $8.95 and by 2022 it cost $14.95. An 8 kg Hap­pi rice which cost $79.95 in 2020 is now cost­ing $99.95 in 2022. While an Ibis 10 kg cost $54.95 in 2020 and by 2022 the price shot up to $94.95.

This pe­ri­od in which the in­fla­tion rate of 2.5 per cent cov­ers, cor­re­sponds to the pe­ri­od that pub­lic-sec­tor unions such as the Pub­lic Ser­vices As­so­ci­a­tion (PSA), rep­re­sent­ing po­lice, fire and prison of­fi­cers, were ini­tial­ly of­fered a two per cent salary in­crease by the Chief Per­son­nel (CPO) in May.

Dr Regan Deonanan, senior economist at the University of the West Indies.

Dr Regan Deonanan, senior economist at the University of the West Indies.

PHOTO DR REGAN DEONANAN

Cost of liv­ing

De­o­nanan ex­plained the cost of liv­ing (COL) refers to the cost of main­tain­ing an ac­cept­able stan­dard of liv­ing. It cor­re­sponds to the cost of ne­ces­si­ties of the house­hold such as, but not lim­it­ed to, food, hous­ing, trans­porta­tion and health­care. An in­crease in the COL from one year to the next cor­re­sponds there­fore to an in­crease in the cost of main­tain­ing the same stan­dard of liv­ing as the pre­vi­ous year.

He added that in T&T, the most read­i­ly avail­able mea­sure for in­creas­es in the COL is the in­fla­tion rate and the in­fla­tion rate is cal­cu­lat­ed from the Re­tail Price In­dex (RPI), where changes in the RPI cor­re­spond to in­fla­tion.

He al­so said the RPI was com­posed of the cost of 15 cat­e­gories of goods and ser­vices lo­cal­ly, weight­ed by the im­por­tance, in­ter alia, to the house­hold. The RPI cov­ers items such as food, cloth­ing, hous­ing, trans­porta­tion, health and ed­u­ca­tion, among oth­er im­por­tant items to the house­hold.

Ac­cord­ing to De­o­nanan, there has been a fluc­tu­a­tion in the price in­creas­es with some years be­ing worse than oth­ers.

“Ac­cord­ing to da­ta tak­en from the Cen­tral Bank of T&T, the av­er­age over­all in­fla­tion rate was 2.5 per cent over the pe­ri­od 2014 through 2022 (con­sid­er­ing on­ly the first three months of 2022). How­ev­er, the over­all in­fla­tion rate in some years was as high as 5.7 per cent (in 2014) and 4.6 per cent (in 2015). This is im­por­tant to note as in­di­vid­u­als may par­tic­u­lar­ly re­mem­ber these more dif­fi­cult years, and take what ob­tained in those years as rep­re­sen­ta­tive of the en­tire eight-year pe­ri­od ini­tial­ly de­scribed.”

Stag­nant wages

On his Twit­ter ac­count last month, Fi­nance Min­is­ter Colm Im­bert said the wage bill an­nu­al­ly is TT$19 bil­lion which is 40 per cent of the an­nu­al rev­enue, and he has re­peat­ed­ly said that the Gov­ern­ment does not have much mon­ey to raise wages.

De­o­nanan weighed in on the de­bate over the Gov­ern­ment’s abil­i­ty to raise wages, point­ing out that giv­en the war in Ukraine and oth­er ex­ter­nal fac­tors, the eco­nom­ic fore­cast may not be “en­tire­ly op­ti­mistic”.

He said there are two sides to the sto­ry–on one hand, the cost of liv­ing has in­creased and neg­a­tive­ly im­pact­ed house­holds. On the oth­er hand, na­tion­al in­come has re­cent­ly fall­en.

“The in­crease in COL with­out a com­men­su­rate in­crease in wages and salaries would cor­re­spond to a di­min­ished stan­dard of liv­ing for house­holds. On the oth­er hand, na­tion­al in­come has re­cent­ly fall­en, and it is not clear whether and how much it may in­crease in the im­me­di­ate fu­ture.

“Im­por­tant­ly, in­creas­es to wages and salaries in any sec­tor of the econ­o­my in the ab­sence of suf­fi­cient rev­enue in­creas­es, and by ex­ten­sion, eco­nom­ic growth, rep­re­sent a change in how we al­lo­cate na­tion­al re­sources across the en­tire econ­o­my.

“Giv­ing more to one sec­tor, in such a sce­nario, may come at the cost of an­oth­er sec­tor. These two sides need to be weighed care­ful­ly to­geth­er, per­haps to en­sure the sus­tain­abil­i­ty of as many house­holds as pos­si­ble in T&T.”

Av­er­age in­fla­tion means the av­er­age rate at which the prices of goods and ser­vices change with­in a year.

Food in­fla­tion in lay­man’s lan­guage is the rise in the cost of an es­sen­tial food item rel­a­tive to the pre­vi­ous price.

IN­CREAS­ES IN BA­SIC FOOD PRICES

2020 2021 2022

Hap­pi Oil 1.5 litre $21.95 $24.95 $33.95

1 gal­lon $49.95 $74.95 $84.95

Hap­pi Sug­ar 900 gram $8.95 $11.95 $14.95

Hap­pi Rice 8kg $79.95 $84.95 $99.95

Ibis Flour 10kg $54 .95 $69.95 $94.95


Credit: Source link

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