Prices in the Business Guardian's Food Basket increased by 34 per cent between October 2010 and this month, October 2015. Examining the basket of items measured during the period September 2004, August 2010, October 2010 as well as October 2015 overall, food prices have increased. Business Guardian's total food basket–which was done at Massy Stores (then HiLo) in October 2010 was $228.44 compared to 2015 where it moved to $306.62; a climb of 34 per cent.
According to the Index of Retail Prices in the Central Bank's data centre, food prices increased by 61.6 per cent between October 2010 and August 2015, the most up-to-date entry on the institution's Web site. Looking at the Business Guardian's list, basic bread and cheese, bread increased by 21.4 per cent and cheese by 19 per cent compared with October 2010. The price of lentils has remained the same though.
Now that the national budget has been presented, many consumers would be looking for ways in which they can make adjustments to their personal budgets. Measuring the affordability of food would be a priority for consumers, especially as Minister of Finance Colm Imbert said VAT would be decreased to 12.5 per cent from 15 per cent, but with indications that the Government intends to reverse VAT exemptions and zero-rated goods.
Addressing the issue of food, Imbert said: "I propose to improve efficiency in collection to broaden the base by reviewing and adjusting exemptions and zero-rated items which are associated with non-essential or luxury items, and which are not critically important to the livelihoods and basic cost of living of our citizens.....I propose to reduce the value added tax rate from 15 per cent to 12.5 per cent."
In 2012, the People's Partnership government had removed VAT from 7,000 items in order to ease consumers from food inflation. A statement from the Ministry of Trade, at that time, had indicated: "Determination of the final list of items was a very complex process which involved careful, detailed and collaborative review of the food items in common use by the majority of our local households, utilising a comprehensive list provided to the ministry by industry stakeholders."
On July 25, former Prime Minister Kamla Persad-Bissessar as an Eid-ul-Fitr/Emancipation gift had announced a 20 per cent discount on selected brands of flour, rice and oil in time for those holiday that year. The gift applied for the period July 26 and August 1.
She said: "This initiative forms part of the temporary stop gap measure to allow for ease of living while the Government actively pursue measures to ensure our food security."
Over several years, two administrations have put measures in place to deal with the rising food prices but nothing can stop the dynamics in the global environment impacting on the final price of food.
Price versus preference
Would shopping for fresh produce in a market versus shopping in a supermarket make much of a difference when it comes to prices?
Not many professionals have the time to go from place to place to shop for produce so they bite the bullet and pay the supermarket price. With extra packaging around the fresh produce and the convenience of a supermarket, the consumer would more than likely have to pay more for their product.
The taste patterns of consumers for imported produce versus local produce would be another factor which would increase any consumer's grocery bill. The greater the demand for imported produce the higher T&T's overall food import bill would be. This, in turn, would impact on other aspects of T&T's economy. One area specifically is foreign exchange.
During its post-budget seminar, the T&T Manufacturers' Association addressed the issue of foreign exchange. Economist Dr Ronald Ramkissoon indicated that the taste patterns of consumers was contributing to the gobbling up of foreign exchange in T&T, as he had urged consumers to buy local.
Competition is expected to increase in the local food manufacturing sector as consumers look for substitutes and try to walk away from luxury goods, all for a good price.
It's clear that in order to cope with food inflation, consumers may demand substitute products. Luxury goods would have to be omitted from the grocery list.
Another aspect of food is take-away or fast food such as doubles where some vendors have increased to $5.00 saying that they were justified in the increase because they would have to pay increased costs for gas.
In the case of the Sunday morning diet of doubles and pie, would that routine continue or would consumers see this as a luxury delicacy?
Would doubles become a single given the price increase meted out by some vendors?
Only time will tell.
Imbert is scheduled to have a mid-term budget and perhaps a re-think of spending on a national level might provoke a re-think of spending by consumers.
Then there are the other aspects for consumers, especially consumers who use public transport. The maxi-taxi fares for the Arima to Port-of-Spain route remained at $7 but the Chaguanas to Curepe has increased to $8. How much the consumer is willing to bear is likely to impact how much they are willing to boycott certain brands and discard certain traits in their taste patterns.
