COLM IMBERT has no choice but to pay careful attention to the sudden and untimely increase in cement prices announced on Monday.
The Finance Minister has difficult decisions to make ahead of his mid-year review, due in a few weeks’ time. Those decisions have been made more urgent by Trinidad Cement Ltd (TCL)’s announcement of an increase of roughly six per cent, which takes effect from February 19. This is on top of a series of increases since 2021 which cumulatively pushed the price up by $14 per bag.
It's also a concern that TCL remains a monopoly and competition was effectively squeezed out by an import quota, imposed also in 2021, that forced sole distributor Rock Hard out of the market.
The impact of the removal of the quota announced on Wednesday by the Trade Ministry is unlikely to immediately offset the impact of the price increase.
Cement has a short shelf life, but its price has a profound impact on the economy. Not only will there be a ripple effect on inflation, but there will also be an impact on the construction sector, which is a key employer, as well as overall economic activity. The robust non-energy growth witnessed in the economy over the past two years has been driven to a significant degree by this sector.
An analysis of Central Bank statistics for the years 2014-2023 bears this out. According to the bank, there has been a steady decline in the local sale of cement. In 2022, sales dipped to a low point of 410,376 tonnes, down from 665,971 tonnes in 2014.
However, sales rebounded last year to 427,044 tonnes as the overall economic picture grew more positive.
It is no exaggeration to say there is a loose correlation between cement sales and the health of the economy.
What makes this latest increase, by $3 per bag, particularly concerning, however, is that it potentially aggravates a situation in which consumers are already bracing for increases.
The return of property tax remains in train. An electricity rate hike is before Cabinet, with the outcome of a review of water rates also in the pipeline. There are questions over the viability of the State’s telecommunications company, and if restructuring is to occur, it may come with pricing reviews as well, in addition to staffing changes.
And these are just some of the anticipated matters that can be flagged as of now.
The turbulent global situation, worsened by ongoing wars and the uncertain outcome of elections due in the US, UK, Venezuela and India, is such that commodity imports could become more expensive at a moment’s notice, distribution routes to markets and suppliers abruptly cut off.
So no, the last thing needed now is yet another price increase. Mr Imbert will have to weigh this carefully if we are to preserve and build on the gains of recent months.