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Govt aims to tackle inflation

Wed, Dec 28th 2022, 09:30 AM
Business Politics Tribune Stories

PRIME Minister Philip "Brave" Davis said the government is targeting initiatives to combat inflation after the Inter-American Development Bank criticised officials' efforts to tackle the problem.

He mentioned efforts such as lowering import duty on some food items while pointing to external factors that compound inflationary pressures.
#“IDB (has) to see what we have done,” Mr Davis said. “We are targeting initiatives to combat inflation.”
#”First of all, what we have to recognise is that there’s external forces beyond our control that’s feeding the inflationary pressures that we are suffering. What we could do we are doing.
# “So for example, we’ve lowered import duty on a number of food items and other commonly used goods that come into The Bahamas. I’ve done that. I’ve engaged in conversations with transportation, with MSC, and other boat owners that bring containers into the country. I’ve been able to get the 35 percent reduction in the cost of containers coming into The Bahamas from the far east.
# “We are working on getting a similar reduction from the US and it’s already dropping. So those are things that we can do by engaging those streams that lend to adding costs to goods in The Bahamas. So each of those streams we’ve been talking to and attempting to lower those costs.
# “We have done what we can and (are) looking at what other things we can do to assist.”
# The Prime Minister was asked if there were any fears the increase in minimum wage will have an impact on the private sector going into the new year.
# “The private sector has not said so and in fact we don’t expect it to have any impact and in consultation with them,” Mr Davis said. “Don’t forget, it’s not the increasing minimum was not a unilateral decision. It was a decision made by industry (under) the Tripartite Council, which includes business, government and unions. So it wasn’t unilateral. So I don’t expect that there may be any fallout.”
# However, last week, Tribune Business reported that a gas station operator warned the 24 percent minimum wage increase will “almost certainly” force the sector to cut staffing levels unless the government grants a long-awaited margin increase.
# The IDB recently pegged annual food price inflation in The Bahamas at 16.1 percent, the second highest in a five-strong Caribbean sample that also included Jamaica, Barbados and Trinidad & Tobago. Only Suriname had a higher rate of food price rises, with The Bahamas’ food inflation outpacing the country’s overall annual inflation rate of 6.5 percent.
# In its latest quarterly Caribbean economic bulletin, the agency also said the government’s price controls are a poorly-targeted mechanism to counter soaring 16 percent food inflation as they benefit the rich as much as low income and vulnerable families.
#The IDB indicated that social assistance to offset the cost of living crisis could be better focused on poor families through the use of conditional cash transfer (CCT) initiatives that build on existing initiatives such as food stamps.
# The report also warned that the price controls will disproportionately impact small and medium-sized food stores that lack the breadth of product range and economies of scale - in comparison to larger competitors - to absorb selling more items at a loss, or below cost.
# The IDB also argued that only the 24 percent or $50 per week minimum wage increase, which is set to take effect on New Year’s Day and raise the legal floor to $260, was targeted specifically at low income or vulnerable Bahamians.
# All other measures unveiled by the government to combat the cost-of-living crisis and inflation, such as import tariff cuts and raising the VAT exemption on electricity bills from $300 to $400, benefit rich and poor alike.
# Retail Grocers Association president Philip Beneby said the IDB’s commentary on the negative impact of expanded price controls on businesses is “spot on”.
# However, Mr Davis still called for grocers to help consumers.
# “I do not act unilaterally and as I said together we are all in this and together we’ll be able to get out of this so we are asking everyone to pitch in. The government has cut its revenue to enable that to be passed on to the consumer,” he said.

He mentioned efforts such as lowering import duty on some food items while pointing to external factors that compound inflationary pressures.

“IDB (has) to see what we have done,” Mr Davis said. “We are targeting initiatives to combat inflation.”

”First of all, what we have to recognise is that there’s external forces beyond our control that’s feeding the inflationary pressures that we are suffering. What we could do we are doing.

“So for example, we’ve lowered import duty on a number of food items and other commonly used goods that come into The Bahamas. I’ve done that. I’ve engaged in conversations with transportation, with MSC, and other boat owners that bring containers into the country. I’ve been able to get the 35 percent reduction in the cost of containers coming into The Bahamas from the far east.

“We are working on getting a similar reduction from the US and it’s already dropping. So those are things that we can do by engaging those streams that lend to adding costs to goods in The Bahamas. So each of those streams we’ve been talking to and attempting to lower those costs.

“We have done what we can and (are) looking at what other things we can do to assist.”

The Prime Minister was asked if there were any fears the increase in minimum wage will have an impact on the private sector going into the new year.

“The private sector has not said so and in fact we don’t expect it to have any impact and in consultation with them,” Mr Davis said. “Don’t forget, it’s not the increasing minimum was not a unilateral decision. It was a decision made by industry (under) the Tripartite Council, which includes business, government and unions. So it wasn’t unilateral. So I don’t expect that there may be any fallout.”

However, last week, Tribune Business reported that a gas station operator warned the 24 percent minimum wage increase will “almost certainly” force the sector to cut staffing levels unless the government grants a long-awaited margin increase.

The IDB recently pegged annual food price inflation in The Bahamas at 16.1 percent, the second highest in a five-strong Caribbean sample that also included Jamaica, Barbados and Trinidad & Tobago. Only Suriname had a higher rate of food price rises, with The Bahamas’ food inflation outpacing the country’s overall annual inflation rate of 6.5 percent.

In its latest quarterly Caribbean economic bulletin, the agency also said the government’s price controls are a poorly-targeted mechanism to counter soaring 16 percent food inflation as they benefit the rich as much as low income and vulnerable families.

The IDB indicated that social assistance to offset the cost of living crisis could be better focused on poor families through the use of conditional cash transfer (CCT) initiatives that build on existing initiatives such as food stamps.

The report also warned that the price controls will disproportionately impact small and medium-sized food stores that lack the breadth of product range and economies of scale - in comparison to larger competitors - to absorb selling more items at a loss, or below cost.

The IDB also argued that only the 24 percent or $50 per week minimum wage increase, which is set to take effect on New Year’s Day and raise the legal floor to $260, was targeted specifically at low income or vulnerable Bahamians.

All other measures unveiled by the government to combat the cost-of-living crisis and inflation, such as import tariff cuts and raising the VAT exemption on electricity bills from $300 to $400, benefit rich and poor alike.

Retail Grocers Association president Philip Beneby said the IDB’s commentary on the negative impact of expanded price controls on businesses is “spot on”.

However, Mr Davis still called for grocers to help consumers.

“I do not act unilaterally and as I said together we are all in this and together we’ll be able to get out of this so we are asking everyone to pitch in. The government has cut its revenue to enable that to be passed on to the consumer,” he said.

Click here to read more at The Tribune

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