Trade Ministry: Food price hikes coming soon

The Ministry of Trade and Industry is bracing for more food price increases to add to the 9.7 per cent inflation of the cost of an average food basket over the last two years.

In a media release on Wednesday, the ministry said it was anticipating additional increases because of import inflation, which will push local prices up in the short term.

Quoting a Central Bank report, it said although food inflation eased to 6.6 per cent in November, thanks to the removal of VAT on some food items, from 7.6 per cent in October last year, core inflation remained steady at three per cent.

The ministry said, “The Consumer Affairs Division of the MTI has undertaken a comprehensive assessment of the 2020 (pre-covid)-2022 prices associated with approximately 118 items which form part of the basket of goods of basic food items and have estimated that over the last two years the average increases in prices have been approximately 9.7 per cent.

“Indications are, however, that imported inflation will continue to push up local prices of food and other items in coming months.”

The assessment came the day after state-owned National Flour Mills (NFM) reported a decline in profit and hinted at another increase in the price of flour. Thelast increase took effect in January.

The ministry also noted the concerns of the Caribbean Millers’ Association (CMA) over a 40 per cent increase in raw materials, which it said could have a domino effect on the price of grain, feed, poultry and dairy products.

It said, “Both local flour production houses are in receipt of stock with further shipments (at increased prices) due to arrive. These businesses will consider in the next few months whether price increases may be necessary.

“The CAD has estimated that locally the price of flour increased by 16 per cent over the period February 2020-February 2022. Other items which increased during this period locally include vegetable and soya oil (42 per cent); corned beef (40 per cent); poultry (29 per cent); infant formula (26 per cent); milk (20 per cent); red beans (16 per cent); salted fish (15 per cent); rice (13 per cent); and granulated sugar (11 per cent)."

The ministry also reported that over the past two years prices on some food items had remained constant, such as powered milk, biscuits, teabags, mauby, baked beans, mayonnaise, dried pigeon peas, channa and salt.

It also said the prices of some items declined such as condensed milk, orange drink, green pigeon peas, peanut butter, brown sugar, onions, ketchup, tuna, potatoes, locally produced cornflakes and coconut oil.

The ministry said in an effort to mitigate the rising costs to consumers, the Government has been proactively monitoring the situation and implemented several measures.

Among these were the removal of VAT, which it said has brought relief to all consumers, and the Central Bank had confirmed this had a positive impact in mitigating the full brunt of price increases.

The suspension of the Common External Tariff (CET) on over 20 basic food items (such as salted fish and canned fish, apple juice, cheddar cheese, canned corned beef, milk and cream, refined sugar, preparations for infant use and soybean and other cooking oils); and increasing the supply of foreign exchange under the EXIM Bank to address financing constraints faced by manufacturers and importers, which included a disbursement of US$650 million, were other initiatives to assist with rising food costs, it said.

Additionally, the Government was reviewing the CET with the aim of modernising the regional regime on tariffs; and implementing a $500 million agriculture stimulus package to support the rapid expansion in production and marketing of selected high-demand commodities.

The ministry said consumers also have a role to play in reducing the import bill by buying local, which could boost the domestic economy and support local manufacturers and farmers.

“Locally produced items remained fairly consistent with some commodities even decreasing in price. The public is therefore urged to exercise its purchasing power by seeking local alternatives which should be supplemented with home budgeting and home gardening,” it suggested.