Price pressures to mount amid rising import costs

Barbadians should brace for higher prices in the coming months, even as official inflation has slowed to 0.5 per cent.

Central Bank Governor Dr Kevin Greenidge warned that US tariffs and rising import costs will push inflation closer to two per cent by year-end, even while everyday expenses, such as food, dining, and entertainment, remain persistently high.

Speaking during the Central Bank’s midyear economic review on Friday, Greenidge explained that Barbados’ fixed exchange rate closely ties local prices to United States inflation, which has recently edged up due to new American import tariffs.

“We are tied to US inflation. We import about 75 to 80 per cent [of our goods],” he said.

“Research shows about a four-month lag [before] those prices eventually feed back through as we import materials and energy.

That’s why we expect a pickup in inflation toward the end of this year.

“If it goes from 0.5 to 2, that’s a significant pickup in six months, and we do expect to see that. We’ve built it into our projection.”

Greenidge acknowledged that despite current low inflation, many Barbadians are not feeling relief because prices remain elevated.

“For clarity, even at 0.5 per cent, that’s an increase,” he said. “Restaurants and hotels…basically eating out, dining, entertainment– those still remain the largest increases in inflation. You will see that in your hotel, in your restaurant, you’ll see it in purchases. But the data also shows that there are some sectors that show a small decline.

“To be honest, yes, prices remain high. They’ve been high for a while.”

Greenidge said the focus now is on minimising further increases through measures like investing in renewable energy while encouraging households and businesses to make smart choices to mitigate the impact.

When asked whether June’s minimum wage hike could drive prices even higher, he said the Central Bank’s outlook already accounts for such adjustments. He urged businesses to prioritise revenue growth rather than fixating solely on costs.

“I think we have more than ample growth opportunities to generate on the other side of the equation, which is the income side and revenue side,” he said. “We have to invest, particularly in the private sector, to generate revenues that will offset any expected increases in doing business.

“Yes, you will get increases in labour costs [and other market changes] as time moves forward. I prefer to focus on the revenue side of the equation.” shannamoore@barbadostoday.bb