Chamber: Profits have been reduced to keep prices low

THE CHAMBER of Industry and Commerce CEO Gabriel Faria said businesses have been reducing profits to keep prices low.

He was responding to a statement by the Supermarket Association of Trinidad and Tobago (SATT) on January 4 indicating an impending rise in prices of supermarket items due to an imminent increase on the supply end as a result of “various challenges in the operating climate”.

SATT said the latest of these increases came in the closing week of 2019 as both Angostura Ltd and National Flour Mills (NFM) signalled price increases in different categories of products to supermarkets nationwide.

Faria in a statement said the Chamber fully supports the fair treatment to consumers in terms of pricing and quality of items delivered by the business community.

"It is informative to note that the Government has boasted that inflation in Trinidad is the lowest it has been for some time. This while businesses have seen their operating costs continue to increase. In fact, over the past four years the private sector has been faced with significant increases in its operating expenses coupled with lacklustre consumer demand."

He said the increases included: the green fund and business levy by 300 per cent; the cost of raw materials and finished good imports due to the adjustment in the exchange rate to $6.80; additional increases in the acquisition cost for foreign currency; the most recent increase of 15 per cent in the minimum wage which has also impacted especially labour intensive organisations significantly; other increased costs of doing business such as having to borrow funds to meet operating expenses because of the non-payment of VAT refunds in some instances for as long as four years; and low productivity has also negatively impacted many business in terms of increasing their cost for the services they provide.

"It is indeed a feat for a country to record such low inflation when businesses have been faced with such dramatic increases in costs. What has contributed to the low inflation is a strategy by many businesses to reduce their profit margins in an effort to maintain prices in the face of significant increases in cost in the hope of stimulating or at least maintaining consumer demand.

"The decline over the past four years without any clear policy to stimulate the economy has forced many businesses to rethink their operating models to ensure their survival, even if at reduced profit levels, to continue to retain some of their employees while providing their shareholders with a reduced return on their investment."