By KHRISNA RUSSELL
Chief journalist of the tribune
BAHAMIANS were urged yesterday to prepare for a minimum of 12 months of higher food costs, noting global trends, particularly those in the United States which are largely affecting the Bahamas.
Gowon Bowe, managing director of Fidelity Bank Bahamas, said as food price hikes had been heralded for months, there should be no surprises from Bahamians who, he said, are sometimes too “indifferent” to events on the international markets.
On Monday, Super Value’s chief financial officer (CFO), Debra Symonette, urged Bahamians to budget their money and prepare for grocery price increases, as reported by a local daily. Ms Symonette said price increases caused by supply chain issues caused by the COVID-19 pandemic, coupled with the 10% increase in Value Added Tax (VAT) on items from the bread basket, present a double whammy for some buyers.
Yesterday, Mr Bowe said that with the rising cost of goods having taken several months to materialise, it was expected that a return to what is considered normal pricing would also take some time.
He said: “…It shouldn’t have come as a surprise to the Bahamas because when the United States catches a cold we catch pneumonia and our biggest trading partner being the United States means that the cost of goods in the United States begins to increase the cost of goods in the Bahamas will also increase.
“It may have been jet lag, that we lived where we had people like Mr Roberts from Super Value who indicated that they did a lot of early shopping in the summer months especially for lock in prices.
“In terms of duration, it’s kind of to think of it like a freight train and the train left the station and the inflation started because all the money supply in the United States created this euphoria and so spending went up, but with limited supply, the price went up because people were willing to buy more or pay more just to be able to get the things they wanted.
“So if you think about the weight and the momentum of a freight train, to slow it down takes time and so that momentum that led to inflation in the United States that now has an effect of training in The Bahamas and the global inflation that is happening due to supply chain shortages has really started to take its toll in The Bahamas.
He continued: “We are going to have to prepare for at least 12 months, maybe a bit longer, and the reason for that is that we have seen inflation build up over the last 12 months. So it takes a long time to build momentum and it also takes a long time to apply the brakes.
“The monetary policy of the United States of raising interest rates is going to have the effect of starting to cut spending, which then should have a ripple effect because if I have less to spend because my borrowing are now more expensive and the environment is more expensive because of interest taking disposable income out of the system so I can’t borrow at cheap rates anymore so what that means is I’m going to have to give up to certain items and it will bring the prices back to normal.”
He said supply shortages have contributed to the current situation.
“There are fewer ships on the ocean because for some reason it might sound crazy, but there are fewer containers available, that’s what the shipping lines say, which means being able to secure a container 20 feet or 40 feet empty now, not even with things in it, is difficult because there is a hoarding of these types of containers.
Last month, Super Value director Rupert Roberts warned buyers in the Bahamas to prepare for the possibility that rising food prices are here to stay, warning: “I don’t believe what goes up should go down.”
Mr Roberts told Tribune Business at the time that no one in the food industry knew whether the expected price increases, resulting from supply chain issues and other post-COVID factors, would prevail for one or more five years, but, he said, prices rarely came down after a rise.
While estimating that the 13-store supermarket chain has “suffered” cost increases on a small minority of its 30,000 product lines so far, he added that the possibility of price increases of up to 20% “on most items” by year-end 2022 could not be updated based on estimates of inflation in the United States and information it received from suppliers in the northern neighbor of the Bahamas.