What’s the Answer to High Inflation?

Joseph Waight

The inflation rate rose to four point two percent in September, up from August’s three point four percent. This marked the second consecutive monthly increase. The Statistical Institute of Belize (S.I.B.) explained that prices in food, restaurants, and accommodation services were the main drivers. Belize is not the only country battling high inflation. According to the International Monetary Fund (IMF), Latin America and the Caribbean anticipate a gradual alignment of inflation with central banks’ targets. The slowdown is attributed to tightened policies addressing inflation and a less favorable external environment. Today, we asked Financial Secretary Joseph Waight what the government is doing to mitigate the effects of inflation.

Joseph Waight, Financial Secretary

“Inflation, there’s no easy answer to controlling inflation. Bigger countries have tried. You know, we are price takers in many respects. I mean, that is we have to take the prices that are on the international market. We can try to…it’s very difficult to determine what is a reasonable markup or what’s an excessive markup. I mean, you know, you’d have to really audit somebody’s books. Some items have higher prices than others because some lose money, some make, It’s not an easy thing to do. Inflation, you have to balance yourself. Yes, you can increase wages to try to catch up, but then you get into spiral, you know, prices chasing wages, wages chasing prices. It gets difficult. There’s not a whole lot you can do immediately to dampen inflation. You can raise in essentially, what you need to do is constrain demand.”

Hipolito Novelo

“What about any consideration in terms of widening the income tax bracket? I know some countries are doing that to allow the worker to go home with more money and pay less income tax.”

Joseph Waight

“Well, there’s always, you know, but the other side of the coin is that any government needs taxes to operate, to provide education, health, and so on. I mean, that is an income tax opposed to tax people who have income. And then you, then you do a redistribution to others who don’t. I mean, that is, you have to fund your system. You have to fund your education system. You have to fund your health and the money has to come from somewhere.”