Will cost of living go down? Importers say it depends on fuel

Belizeans have been feeling the pain of a high cost of living, according to a recent poll of City residents. But are there plans to bring down prices? News Five’s Marion Ali canvassed the main suppliers of imported goods to find out if there will ever be some relief.

Marion Ali, Reporting
While Belizeans have seen fuel prices plunge by almost half of what they were only a month ago, we are yet to start enjoying lower prices of commodities. And there are a few reasons for this. The reality, according to some of Belize’s biggest importers is that while some project that the cost of living will eventually show a decline, others believe it will continue to soar, regardless of low fuel prices.

Santino Castillo, Owner, Santiago Castillo Ltd.
“Many manufacturers were way behind where commodity prices were concerned. Commodity prices had increased and increased and increased. Kraft foods for example, has an increase in 2008 of two billion dollars more than the previous year and while the commodity prices had increased by thirteen percent they had only increased their prices to the consumer to today’s date by seven percent. So they’ve already announced that they won’t be going back down.”

But General Manager of Grace Kennedy Belize Limited, Alberto Young and Sherman Sawers of Brodies have other views.

Alberto Young, General Mgr., Grace Kennedy Belize Ltd.
“The impact on fuel is immediate. Food prices, however, take a while to be affected. For instance, a lot of raw materials, our warehouses are filled with products that were purchased prior to the price of fuel being reduced. And what happened is, you have contracts, a lot of things that have been bought before hand. So these things take a little while to trickle down to the price of food. Of course you also have to consider the fact that there is a demand and supply issue when it comes to food like coconut powder, for instance, coconut milk products have a high demand but very short supply of coconut products. We also have our cost of raw materials that also affected the cost of food. So those things have to also be considered so it’s not an immediate effect. It will happen and actually Grace Kennedy negotiates everyday for a reduction in prices and so on from the suppliers because we buy globally and that’s something that I was looking at. But it doesn’t happen overnight and one of the things that consumers have to be cognizant is that it will come but it will come with time. It won’t happen tomorrow. It will probably take another three or four months to see the prices reduced.”

Marion Ali
“Will it be a significant reduce?”

Alberto Young
“I wouldn’t say significant, I’m thinking between ten and fifteen percent on some items.”

Sherman Sawers, Manager, Brodies
“Most of the food items that were risen due to higher fuel prices are still in the pipeline. It will take some time now for these items to be depleted. We are looking at up to about a year time before these items are going to be out of stock.”

Marion Ali
“By then the fuel prices could have gone up again.”

Sherman Sawers
“That’s right, fuel prices will could go up and affect the prices again.”

Marion Ali
“So in reality that could never materialize then, that the prices of goods could go down.”

Sherman Sawers
“Well, it all depends on the fuel. I have seen prices reduce in dairy products and what I know about dairy products is that these are items with short expiration life and are produced more frequently. So the price of fuel affects the dairy products so we are getting cheaper prices on dairy products.”

Marion Ali
“Can u explain to us why it is that I go to one of your competitors and find things for one price, same size, same brand and if I come here I find it at another price—I won’t say if it’s more or less—but why is that the case?”

Sherman Sawers
“There are price control on certain items but it all depends on your supplier. The prices reflect on your suppliers and we might buy direct from the production plant, while other places may be buying from a broker, which additional cost before the goods get her in Belize City.”

Marion Ali
“So that would be why the markup…”

Sherman Sawers
“That’s one of the causes and other causes are probably somebody would buy a buy out deal other than something that is fresh from the factory.”

But while many people feel that traders globally are taking advantage of consumers, Sawers is of a different opinion.

Sherman Sawers
“These people are not people that would take advantage of our customers and gouging, they are reputable companies and whatever their cost of manufacture, they would pass it down to us.”

And according to Acting Director at the Bureau of Standards, Jose Trejo, while policing local retailers is a bit challenging, it is left up to everyone to help stop the gouging locally.

Voice of Jose Trejo, Ag. Dir., Bureau of Standards
“For the regulated commodities we have to keep track of production, we have to keep track of these ones. These are the ones that we legally mandated to do but anything outside of that, the unregulated ones is left up to market forces. That’s just the nature of the beast.”

Marion Ali
“Yeah, but market forces you’re talking the ones outside right?”

Voice of Jose Trejo
“Yes, of course. That will automatically impact on the domestic price level for unregulated commodities. Again, when it comes to regulated, yes we have to work towards that and see how we can best turn things around in terms of domestic prices of these commodities. But when it comes to the unregulated ones, I don’t think it should be the responsibility of the government to go out and drop the hammer on the business community. They have a conscience, they are the ones who should exercise some kind of moral fortitude to offer prices to consumers who can afford it. I think that’s their responsibility.”

Because the price of fuel has been a major contributor to price hikes at the stores, owner of Santiago Castillo Limited, Santino Castillo, feels it could fluctuate in the future.

Santino Castillo
“The increasing price of fuel could do one of two things; the price of oil can in fact stabilize and the prices won’t increase that much or there can be trigger off effect and in fact, oil might increase as well. Experts have predicted it both ways.”

And while that is a very real possibility, Castillo says there are measures that he would like to see government take in cooperation with local importers.

Santino Castillo
“What I would like to do is get with my business colleague, people like Billy Musa who is a competitor at James Brodies or Grace Kennedy’s Alberto Young—people have to come together—Karl H. Menzies. What I would like to do is get a hundred staple products and together work at the same table on these products and submit these hundred items and submit them to the government so that at the next budget reading, if not 2009, at least 2010, these prices can be reduced. We can have les duty on them, reduce the revenue replacement on some of the meats etcetera and I believe that will help to alleviate the problem. When you see that certain items are being contraband and bought at Chetumal, I’ve already calculated, you remove the duty on the top hundred, many Belizeans instead of spending a hundred and fifty million in Chetumal, will be spending at least half of that right here in Belize.”

Marion Ali for News Five.