Don’t expect any ease in prices, says economist

by Marlon Madden

One economist is warning local tourism officials and residents to brace for continued high costs especially as it relates to agriculture produce and other items that have to be imported.

Former University of the West Indies (UWI), Cave Hill Campus lecturer Jeremy Stephen said as long as the COVID-19 pandemic continued to be widespread Barbadians should expect higher inflation, due to several external factors.

He gave this assessment as he brushed aside the notion that things could become peachy for the tourism sector if vaccination of industry workers became mandatory.

“At the end of the day, a massive amount of inflation pretty much is going to affect the cost of services within the industry as long as the global community is still troubled by COVID,” he predicted.

Pointing to a shortage of farm labourers, which some experts have predicted could get worse, coupled with the ongoing logistics challenges, Stephen said those issues were already having
an effect on prices, and there seems to be no easing up any time soon.

“There is the external effect of COVID bearing very sour fruits on the future economic performance of Barbados with respect to inflation,” said Stephen.

“Most of those prices would have well been imported into Barbados through our most natural input which is mainly food and certain raw materials, which the tourism industry out of most other industries is a very large contributor to those imports,” he said.

While some economists have predicted that commodity prices could stabilize in coming months, others have indicated that prices could continue to rise due to massively higher freight costs as shipping containers continue to pile up in some main shipping corridors, resulting in a slowdown
in border crossing.

Pointing to the record number of container ships that continued to pile up off the coast of California waiting to offload, Stephen predicted that “it is going to impact very substantially, the price of goods imported into Barbados around the Christmas period because of all of this backlog”.

“That is pretty much going to feed into our Christmas period in Barbados in terms of imports and you could expect a massive set of inflation going into the new year,” he added.

Stephen was speaking as a panelist during a recent Barbados Hotel and Tourism Association (BHTA) public relations committee webinar series, where officials explored the topic Vaccination in Tourism: Is it a choice?

He insisted that making the vaccines mandatory would not stop the island’s competitiveness from coming under severe pressure once the pandemic was still prevalent across the globe.

“So all in all, I am just thinking that the competitive state of Barbados is deteriorating as long as the pandemic remains as rife as possible. I am not saying we should take away human rights. In fact, that is one of the glories of working in Barbados.

“But we have to understand or at least inform our policymakers that expectation should not be that we are going to get out of this if we go the full way and exploit persons or disregard human rights on one end of the spectrum, or if we go the full monty and say ‘everybody is vaccinated therefore we should be roaring back to where we were like 2018 before or 2007 before’.

That is not going to happen regardless, so it is just about picking which poison we are going to deal with and listen to the advisors and stay the course,” he explained.

According to the latest Central Bank report, the 12-month moving average inflation rate was estimated at around 1.5 per cent as at May 2021.

“Food prices, especially for vegetables, were responsible for an upward trend in inflation over the last half of 2020. However, this direction has slowed during the first half of 2021,” it said.

The central bank report noted that some of the lower prices experienced during that time could be linked to increased discounting by businesses as they adapted to the COVID-19 environment.

marlonmadden@barbadostoday.bb