Several leading heads in various sectors of the economy believe that Trinidad and Tobago is in for significant declines in 2022, as the pandemic persists and uncertainty looms.
Their comments came after the Central Bank on Friday issued its final Monetary Policy Announcement (MPA) for 2021 which stated there would be further increases in food and core inflation.
“Food inflation surged to 7.6 per cent from 5.8 per cent in September and is likely to rise further given the situation in the global grain markets,” it said.
The Central Bank pointed out that headline inflation in October moved to 3.9 per cent year-on-year when compared to 2.4 per cent in September. Core inflation, which excluded food, doubled to 2.9 per cent and the index of building material prices rose by 12.6 per cent during the third quarter of 2021.
Economist Dr Vaalmikki Arjoon told Sunday Newsday that the increase of wheat prices has started a chain reaction that would further exacerbate an already high cost of living.
Despite some food processing importers and distributors sourcing suppliers in closer proximity, like in Latin America, Arjoon explained the supply chain problems persisted because of demand and supply parameters globally.
He said, “Everyone including business owners and their households will be faced with this increased cost of living due to increased flour prices – they will again transfer this higher cost onto consumers, which will inflate prices even more, not just for items for which flour is used to produce but also other consumables that are used daily.
“Supply chain problems will possibly prolong at least until the latter part of 2022, despite some increases in factory production from Asia. Going forward, local manufacturers, especially food processors, should consider using hedging strategies, to lock-in specific prices from suppliers of raw materials, such as agricultural commodities used in the food processing industry, etc, thereby protecting themselves from having to pay higher prices in future if there are further price increases on the global market.” At the close of 2021, major flour suppliers, National Flour Mills and Nutrimix announced price increases, effective early January, which range from 10-22 per cent. This had the trickle effect of announcements by Kiss Baking Company and Linda's Bakery Ltd of impending increases in the prices of its bread products.
[caption id="attachment_932519" align="alignnone" width="736"] Antoniana Clarke stocks up on her flour supply at Better Deal Supermarket in Aranguez on December 29, 2021. Flour prices will be increased in early January. - PHOTO BY SUREASH CHOLAI[/caption]
Price increases, Arjoon pointed out, will be compounded further by shortages caused by delays at major international ports, severe freight charges from China, higher black market forex fees for importers who cannot access adequate forex from authorised dealers, higher energy prices and customs overtime and port rental charges.
He said the move by the US Federal Reserve to halt liquidity inje
