Consumers are screaming as prices continue to climb.
Last week, the National Flour Mills (NFM) raised the wholesale flour price by 33% and suggested a retail price increase of 28%. In a press release, NFM said that if a typical family used a two kilo bag of Ibis flour per month, it would go from $14.77 to $18.93 or 28%.
This is the second time since January that NFM has raised its prices.
The statistics reflect the increase in staple food prices.
The headline inflation rate in T&T from 2014 to 2022 was 2.5%. However, the average annual inflation rate in the food category was 4.7% per year from 2014 to 2022.
To give an example, an annual inflation rate of 2.5% means that on average, a dollar buys 2% less goods and services than the previous year.
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 government’s ability to raise wages.
He also said that in the first three months of 2022 the average food price inflation was 4.8% compared to the average of 4.4% in 2021 and he expects the situation is getting worse.
“Food inflation is expected to increase in 2022 given the difficult state of the global economy and our dependence on imports. It should be noted, however, that T&T has suffered in previous years of high food inflation: 10% in 2014, 8.6% in 2015 and 7.4% in 2016.”
Dividing the percentage increases into real dollars and cents, a look at the prices of four food staples – flour, sugar, oil and rice – shows the steep price increases over a three-year period.
A 1.5 liter of Happi oil cost $21.95 in 2020 and in 2022 it jumped to $33.95. A 900 gram Happi sugar in 2022 cost $8.95 and in 2022 it cost $14.95. An 8 kg Happi rice that cost $79.95 in 2020 now costs $99.95 in 2022. While a 10 kg Ibis cost $54.95 in 2020 and in 2022 the price has jumped to 94.95 $.
This period, covered by the 2.5 per cent inflation rate, corresponds to the period when public sector unions such as the Public Service Association (PSA), representing police, firefighters and prison officers, were initially offered a 2 per cent pay rise by the chief of staff (CPO) in May.
Dr. Regan Deonanan, Senior Economist at the University of the West Indies.
PHOTO DR REGAN DEONANAN
Cost of life
Deonanan explained that cost of living (COL) refers to the cost of maintaining an acceptable standard of living. It is the cost of household necessities such as, but not limited to, food, housing, transportation, and health care. An increase in the COL from one year to the next therefore corresponds 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 COL increases is the inflation rate and the inflation rate is calculated from the Retail Price Index (RPI), where the changes in the RPI correspond to inflation.
He also said that the RPI was made up of the cost of 15 categories of goods and services at the local level, weighted by importance, among other things, to the household. The RPI covers items such as food, clothing, shelter, transportation, health, and education, among other items important to the household.
According to Deonanan, there has been a fluctuation in price increases, with some years being worse than others.
“According to Central Bank data from T&T, the average headline inflation rate was 2.5% over the period 2014 to 2022 (considering only the first three months of 2022). However, the overall inflation rate in some years reached 5.7% (in 2014) and 4.6% (in 2015). It is important to note that individuals may particularly remember these more difficult years and regard what was achieved in these years as representative of the entire eight-year period originally described.
On his Twitter account last month, Finance Minister Colm Imbert said the annual wage bill was TT$19 billion, or 40% of annual revenue, and he repeatedly said the government is not didn’t have a lot of money to raise salaries.
Deonanan weighed in on the debate over the government’s ability to raise wages, noting 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 the one hand the cost of living has risen and has had a negative impact on households. In contrast, national income has recently fallen.
“The increase in the COL without a proportional increase in wages and salaries would correspond to a drop in the standard of living of households. On the other hand, the national income has recently fallen, and it is unclear if and to what extent it could increase in the immediate future.
“It is important to note that increases in wages and salaries in any sector of the economy in the absence of sufficient increases in incomes, and by extension, economic growth, represent a change in the way we allocate national resources across the economy.
“Giving more to one sector, in such a scenario, can come at the expense of another sector. These two aspects need to be carefully weighed together, perhaps to ensure the sustainability of as many households as possible in T&T. »
Average inflation refers to the average rate at which the prices of goods and services change over the course of a year.
Food inflation in layman’s terms is the rise in the cost of an essential food item from the previous price.
RISE IN BASIC FOOD PRICES
2020 2021 2022
Happi oil 1.5 liter $21.95 $24.95 $33.95
1 gallon $49.95 $74.95 $84.95
Happi sugar 900 grams $8.95 $11.95 $14.95
Happi rice 8kg $79.95 $84.95 $99.95
Ibis flour 10kg $54.95 $69.95 $94.95