Consumers bawling as prices increase

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.

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