Food, energy hikes play tug of war with Jamaicans

Dennis Morrison, Contributor

As gas prices and electricity bills keep on climbing, consumers who had got some relief through reduced domestic food prices are having to cope with rising inflation. On my last trip to 'Curry' a week ago, bargain prices had disappeared, especially for vegetables and some fruits, reflecting the seasonal fall in supplies.

Asked about the hike in the price of yam or tomato or cabbage or lettuce, the answer came back in each case: "Yam gone home", "tomato gone home", "cabbage gone home", "lettuce gone home", and so on.

The year started with consumers getting respite as falling domestic food prices resulted in negative monthly inflation rates for January and February. By March, however, they began to feel the effects of increased prices for imported food, as well as rising light bills and gasolene prices. And those pressures have persisted as indicated by the monthly reports from the Statistical Institute of Jamaica. In fact, the report for May shows that the category that includes electricity, gas and other fuels registered the highest increase of 2.2 per cent for that month, while food went up by 0.8 per cent.

The reading from international markets points to continuing upward pressure on oil prices which Jamaicans have experienced at the gas pumps. After a brief pause near the end of June when Saudi Arabia's decision to ramp up oil production, and the announcement of the release of oil from the International Energy Agency's strategic reserves, caused prices to fall, there has been a near total turnaround in the market. Prices for the two leading benchmark crudes - West Texas Intermediate and Brent - that fell by US$11 and US$16 per barrel, respectively, over the two-week period to the end of June, had by last week returned to their high points reached in mid-June.

Petrol prices rising

In Jamaica, the billing prices for 87 and 90 octane have passed the previous peak levels reached in mid-June. Last Thursday, the billing prices for 87 and 90 were $100.29 and $101.95 per litre, respectively, coming from $96.39 and $98.05, respectively, on June 30. While the full impact of Saudi Arabia's production increase and the release of oil from the strategic reserves may yet have some moderating effect, this may be short-lived. Jamaican consumers are best advised to get used to high energy prices.

Where domestic food prices are concerned, the increases in the last two months have been sharp, particularly for items that had hit rock-bottom in January, February and March. The most dramatic have been cabbage and tomatoes, as people who have shopped at the farmers' markets would have seen. From as low as $10 and $15 per lb in February and March, cabbage sold for $70 per lb last week at 'Curry'. Cooking tomatoes, which you could get for $15 per lb when supplies were plentiful, are now more than $70 per lb. Carrots have also gone from $30 per lb to $70.

Prices for ground provisions have climbed, but not as sharply. They did not fall as steeply and have not increased as sharply. Irish potato and yam have gone up significantly in the past two months, with yam going from $50 per lb in March to $80 per lb now, but sweet potato, dasheen, coco, etc., have been pretty stable. Oranges, which are out of season [and are threatened by disease], are now offered at up to $250 per doz. and not less than $100 per doz.

Shop wisely

Though we are not threatened by drought so far this year, we can expect that in these summer months seasonal factors will keep the pressure on many of the important items in the domestic food basket. Consumers have no choice but to shop wisely and conserve energy as they strive to make ends meet. Even as they do so, however, our vulnerability to oil price increases and big fluctuations in food production should remind us how urgent is the task of diversification of our fuel source and modernisation of our agriculture.

I regret to have to comment on signs that the excitement about the upgrading of Coronation Market is dying down. During the last Christmas season, and in the early weeks of this year, one got a feeling that at long last things were moving. The refurbished areas were well organised, with stalls and pathways laid out systematically. But as the months have passed, the old disorderly ways have crept back. Goods are once again being spread out in the pathways and the congestion is returning - who is in charge?

Improvement works seem also to have come to a standstill after Digicel's enthusiastic effort and investment to get the process started. Is this going to be another case of the Jamaican inability to sustain any effort?

Dennis Morrison is an economist. Email feedback to columns@gleanerjm.com.