By KHRISNA RUSSELL
Tribune Chief Reporter
BAHAMIANS were yesterday told to brace for a 12-month minimum of higher food costs, noting global trends particularly those in the United States that largely affect The Bahamas.
Gowon Bowe, Fidelity Bank Bahamas’ chief executive, said as rising food costs were foreshadowed for months, there should be no surprise from Bahamians who, he said, are at times too “lackadaisical” about the happenings of international markets.
Super Value’s Chief Financial Officer (CFO) Debra Symonette on Monday urged Bahamians to budget their money and brace for price increases on grocery items, as reported by a local daily. Ms Symonette said the price increases brought on by supply chain issues caused by the COVID-19 pandemic, coupled with the 10 percent increase in value-added tax (VAT) on breadbasket items, present a double “whammy” for some shoppers.
Yesterday, Mr Bowe said as the increased cost of goods took several months to materialise, it was expected a return to what is considered normal pricing is also going to take some time.
He said: “…It shouldn’t have been a surprise to The Bahamas because when the United States catches a cold, we catch pneumonia and our greatest trading partner being the United States means that as the cost of goods in the United States starts to go up the cost of goods in The Bahamas are going to go up as well.
“It may be a timing difference, which we were experiencing where we had the likes of Mr Roberts from Super Value who indicated that they had done a lot of advanced purchases in terms of during the summer months in particular to lock in prices.
“In terms of how long this is going to last, it’s a little bit of thinking about it as a freight train and that the train has left the station and it’s built up momentum in that inflation started because all of the money supply in the US created this euphoria and so spending increased but with a limited supply the price went up because people were willing to buy higher or pay higher just so that they could get the things that they wanted.
“So, if you think about the weight and the momentum of a freight train, in order to slow it down it takes time and so this momentum that has led to inflation in the United States that is now having a knock-on effect in The Bahamas and global inflation that is taking place because of supply chain shortages really started to come through to The Bahamas.”
He continued: “We are going to have to brace ourselves for at least 12 months if not slightly longer and the reason being is we’ve seen the build up of inflation over the last 12 months. So, it takes a long time to build momentum and it equally takes a long time to apply the brakes.
“The United States’ monetary policy of increasing interest rates is going to have the effect of starting to curtail spending, which then should have a knock on effect because if I have less to spend because my borrowing is now more costly and the environment is more costly because of interest taking disposable income out of the system, so I can’t borrow at cheap rates any more, then what it means is that okay I am going to have to forego certain items and that’s going to bring prices back to normal.”
He said supply shortages have contributed to the current situation.
“There are less ships on the ocean because for whatever reason it may sound crazy but there are less containers available is what shipping companies are saying, meaning that being able to secure a 20ft or 40ft container empty now, not even with things in it, is difficult because there is hoarding of those types of containers.”
Last month Super Value’s principal Rupert Roberts warned Bahamian shoppers to brace for the possibility that increased food prices may be here to stay, warning: “I don’t believe in what goes up must come down.”
Mr Roberts told Tribune Business at the time that no one in the food industry knew whether the anticipated price rises, resulting from supply chain woes and other post-COVID factors, will prevail for one or five years, but, he said, prices rarely came down after an increase.
While estimating that the 13-store supermarket chain has “put through” cost increases on a small minority of its 30,000 product lines up to that point, he added that the possibility of up to 20 percent price hikes “on most items” by year-end 2022 could not be discounted based on US inflation estimates and information he was receiving from suppliers in The Bahamas’ northern neighbour.