Inflation: The Rising Cost of Goods at the Grocery and Pumps
Inflation has become a hot button topic across the country. In 2022, the nation saw the highest annual inflation rate since 2008. Prime Minister John Briceño has stated that the annual inflation rate for this year will be significantly lower. Yet and still, Belizeans across the country are feeling the pinch at grocery stores and at the fuel pumps. But, what are some of the factors causing inflation and can we expect some relief anytime soon? In this installment of the Five Point Breakdown, News Five’s Paul Lopez takes a closer look at inflation and the effect the numbers are having on Belizeans. Here is that report.
Paul Lopez, Reporting
Point 1: What is Inflation?
Roque Villamil is a retired fisherman from Sarteneja Village. He now moves around Belize City on his cart sellingfruits and vegetables. The selection is small. Today it includes plantains, limes, cabbages and bananas. Inflation is defined as an increase in the price ofmerchandise. The dramatic, upward shift in the cost of goods has forced Roque to increase the prices of these basic food items.
Roque Villamil
Roque Villamil, Vendor
“I sell the plantain three for a dollar. Dah market a dollar for one. And the lime, three for dollar, cabbage I sell it one fifty for the pound, banana I sell it six for dollar.”
Paul Lopez
“But this is more than it use to be.”
Roque Villamil
“Yeah, I pay sometimes six dollar for one case of banana, one box, and you nuh the mek nothing, you the make maybe five dollar, four dollar for the case.”
Roque, like many other vendors and consumers across the country, is still coming to terms with the sharp increase in the cost of goods.
Point 2: How Is Inflation Calculated?
The Statistical Institute of Belize (SIB) measures inflation using a select basket of goods. Year round, SIB compares the cost of that basket for a single period to the cost during the same period the following year. Looking at individual items, when comparing August 2022 to August 2023, rice and cilantro saw increases. On the other hand, premium fuel for the same two periods saw a decrease in price. SIB considers where there are increases and decreases in the basket to determine the country’s overall inflation rate for comparable times. We spoke withRumile Arana, an independent consultant who specializes in economic and financial analysis, to better understand inflation.
Rumile Arana
Rumile Arana, Economist
“So essentially you might buy a watch one day and a month down the road the price of that watch has increased because there is a general movement in prices. We take a weighted average of that basket of good, three hundred and ninety-five goods and try to solidify that into one figure, which would be the inflation rate. With those three hundred and ninety-five goods, those are separated into thirteen different categories. There are categories like transportation, housing, there is personal care. So, the movement in specific goods determines what goes on in the inflation rate.”
Point 3: What Causes Inflation in Belize?
Across the country, prices on certain food items have seen increases at alarming rates. According to the statistics, 2022 saw the highest level of inflation, since 2008. That was at six point six point seven percent overall, more than three times the two percent ideal inflation rate. But, what has been fueling this rapid rate of inflation? There have been multiple responses to this question. One of the primary answers from the Government of Belize has been that Belize imports its inflation.
Eamon Courtenay
Senator Eamon Courtenay, Leader of Government Business (File: March 29, 2023)
“Madam President, the government is mindful of the effects of the pandemic, the war in Ukraine and record inflation in the world and we are fully aware that these adverse shocks are having negative effects on the cost of living.”
Rumile Arana
“There is a few different factors. There is the demand for a good and service, so those good drive prices high. What happened is that after COVID, the demand for all goods and service increased, because everything was depressed. So, whatever it is, vehicles or cell phones, the prices started to increase cause people wanted more. The cost side more than likely has to do with oil and oil related products. There was that war between Russia and Ukraine that people thing had nothing to do with us, but it constricted the amount of gas and all that available in the global agents reacted and increased the prices.”
Point 4: A Negative Effect of Inflation
A consumer’s purchasing power weakens due to inflation. That is because rising costs effectively decreases the number of goods or services a person can purchase. We spoke with several persons who have experienced their purchasing power diminish over time.
Noel
Noel, Grocery Shopper
“About forty percent more.”
Paul Lopez
“And what kind of items would you say you are seeing increases in?”
Noel
“Everything, including flour.”
Paul Lopez
“And you purchase fuel?”
Noel
“A lot.”
Paul Lopez
“And how much more are you spending?”
Noel
“About two hundred.”
Atanacia Oliva
Atanacia Oliva, Grocery Shopper
“Hmph, I spend about a thousand dollars for the month.”
Paul Lopez
“How so?”
Atanacia Oliva
“Because everything expensive, every time you go to shop, you find stuff that cost four dollars last week, this week cost five dollars or six dollar. Like flour, rice and sugar, butter, because I make cakes, you know, so everything.”
Paul Lopez
“So you have had to raise your prices on your cakes.”
Atanacia Oliva
“Yes I have to, because the boxes I use to buy for two seventy-five dah five dollars. The card board I use to buy for three dollars or two dollars, right now dah five dollars.”
Malika Belgrave, Grocery Shopper
“Every week dah like one fifty, a hundred and fifty dollars.”
Paul Lopez
“More?”
Malika Belgrave
“Well more, I don’t spend much cause I go to the market try buy convenient stuff, go to the convenient store and so on. A lot of canned goods are increased, like corn beef you know. It is really expensive, so we have to stick to reasonable stuff.”
Point 5: When will Prices Decrease and Purchasing Power Improve?
In his Independence Day address, Prime Minister John Briceño noted that domestic inflation is expected to fall to three point seven percent this year.
Prime Minister John Briceño
Prime Minister John Briceño
“Especially pleasing is the forecast for domestic inflation, expected to fall from 6.1 percent last year to 3.7 percent this year.”
So, does that mean that the cost of food items will begin to decrease and our purchasing power get better? We asked Arana.
Rumile Arana
“What is happening is that we are not getting an unformed reduction in prices, we are not getting that deflation we want, but the increase in prices is slowing. The most recent projections I have seen from the IMF estimates that our inflation will go down to about one point two percent, but that is not until around 2026, 2027. Unfortunately like I said, prices remain high in several different categories. The food category, the monthly inflation is like above eleven percent for eight or nine months. So we are not going to see that immediate reduction in prices but we are going to see the rise in prices subdued.”
Reporting for News Five, I am Paul Lopez.
