A new poll has revealed that most Barbadians are concerned about the effects of the increasing cost-of-living and are unsatisfied with government’s response.
This was revealed during the ongoing James Tudor Institute of Politics series: Tackling the Cost-of-Living Crisis held virtually on Sunday night. Not going into detail about the survey and the number of respondents who participated online between May 28 and June 5 this year, political scientist Devaron Bruce reported many Barbadians are seemingly displeased with the response government has had thus far in responding to the cost-of-living, as 92 per cent responded that government was not doing enough to address the matter.
The poll, which was commissioned by the Democratic Labour Party (DLP), also saw some 93 per cent of respondents echoing concerns about the price increases over the past few months, 87 per cent said they have seen increases to electricity bills; 82 per cent noted higher costs at the fuel pump and a staggering 97 per cent saw increases on food and groceries at the supermarket. Another serious concern was that 55 per cent of respondents revealed that the rapid increases in cost-of-living has negatively impacted their mental health.
Pro Vice-Chancellor of the Board for Undergraduate Studies and Professor of Finance at the Cave Hill campus of the University of the West Indies (UWI), Justin Robinson noted that while the island has not yet reached the highest recorded inflation rate of 14.5 per cent reached in 1981, Barbados was skating very close to this level. The Central Bank recorded in the 12 months between March 2021 and 2022 there was 9.3 per cent jump in the cost of living. With this crisis not near an end, Professor Robinson stressed that low-income households will be most vulnerable if governmental strategies are not conceptualized to mitigate the impact.
“There is no one-size-fits-all, you need agile fiscal strategies that are tailored to an individual country’s circumstances and I would suggest that certainly the first priority or the priority of the government would be alleviating the pressure on the most vulnerable. I think countries like Barbados that have well developed social safety nets could consider and seek to deploy targeted and temporary transfers or reliefs to vulnerable groups while allowing the domestic prices to adjust. I think by allowing the prices to adjust will protect our fiscal situation. Given all we have gone through, we don’t want to do anything to endanger the fiscal and it can create some of the right incentives so that people can invest in renewable energy, more domestic food production and so on,” Robinson suggested.
As it relates to policy recommendations to respond to these external shocks and/or provide direct support to cushion the impact on the most vulnerable, Canada-based economist Carlos Forte turned to relief through government’s import tax regime. He explained that countries like Barbados that have a high import duty regime are in a unique position in regard to policy choice to reduce duties in a judicious matter to mitigate the price increases without forgoing revenue that would be earned on account of import prices increasing. Barbados has some of the highest gasoline and fuel prices in the world with the tax component representing about 49 per cent of the final retail price. With that said, Forte reiterated his recommendation for government to reduce the excess tax component of the price at the pump to provide some ease for consumers.
On the other hand, economist Jeremy Stephen suggested that inflation was a fact of life no matter the size or make up of the economy. In Barbados’ case, he noted the majority of inflation is imported and then sustained or “worsen” based on taxation or pointed taxation policies. He contended therefore, that the best way to tackle inflation over the long term is to address the problem structurally. He also advanced focusing on incentivizing productivity and redefining how CARICOM can be used as a buffer in the delivery of goods to shield Caribbean territories against global inflation.
“The issue is extremely systemic. It will happen again,” he said. “The fact it is happening now is very uneventful especially coming out of a pandemic. Signs were there that it was going to happen, it has happened and the vulnerable were not protected but for the long term. I believe that the vulnerable would be better protected through social policies that I am not necessarily able to comment on in full authority.
“The fact remains that there are so many dynamics at play that unless we actually have a very hard conversation with ourselves over the next three/four years this will be endemic. Next inflationary period, could be a war, could be an actual real shortage of some raw material, a logistical challenge that sustains, … and not having insight into where that goes or how to prepare for that, pretty much puts us back in that situation within a generation, probably beyond where inflation was in the 1980s” Stephen added. (KC)
