We Must Continue To Fight Against The High Cost Of Living

By Dr. the Hon Timothy Harris Ph. D

Dr. the Hon Timothy Harris Ph. D

High oil prices are bad news worldwide.  They have significantly changed the dynamics of trade among countries, slowed growth in an industrial giant like the USA, and have even affected oil-rich Trinidad and Tobago where their recorded trade surpluses driven by oil receipts have been inadequate to contain the cost of living. 

But the cost of living too is affected by more than higher oil prices.  It is also driven up by the diversion of primary products such as wheat, corn, and sugar cane from the food chain into the production of ethanol and bio fuels as the world searches for viable alternatives to oil.  The effort to find cheaper oil alternatives has created a reduction in food supplies thereby causing record high prices for wheat, corn, flour, bread, and dairy products, etc.  Countries like Thailand and India are beginning to restrict the export of grains which will create further supply shortages and consequently higher prices. 

As the cost of living climbs between last year and now, 100 million new people have been added to the list of poor people worldwide.  The World Food Programme has asked for billions of dollars more for food aid. Haiti, Egypt, Yemen, and Bangladesh have rioted over food.  This is a global crisis.  ~~Adz:Right~~

A third critical factor resulting in a higher cost of living in St Kitts and Nevis is the phenomenal economic growth in China and India.  With this growth has come the increasing affluence of millions of people in the two most populous countries in the world.  Indeed, nearly 40% of the world’s population, six billion plus people, reside in China and India.  High demand there for beef, dairy products, and high protein foods has limited the stock available for other countries and the impact is felt in the higher prices which we are now paying for many primary and non-primary products.

Global Problem

It is important for people to understand that the cost of living is now a global phenomenon.  It is not created by the policies of this Labour government.  Indeed, whether there is a Labour or PAM government in office, the current cost of living would be high because it is externally driven.

When products get to St Kitts and Nevis, we pay the cost of the product plus freight and insurance. Additionally, there are two other major add-ons.  One is the government imports namely, consumption taxes and service charges, and the second is the mark-up by those engaged in the distribution on and sale of the products.

Caring Government

Fortunately for us in the Federation, this caring Labour administration has sought to limit these two add-ons.  Firstly, in November 2007, we introduced a price control order limiting the mark-up on some twenty-nine food and non-food items including pharmaceuticals and Pampers.  Secondly, on May 1st, we waived the consumption tax on twelve items, namely: canned corned beef, margarine, tomato ketchup, canned tuna, vegetable oil, sardines, canned vienna sausages, processed cheese, macaroni, spaghetti, macaroni and cheese dinner, and baby foods.

Additionally, the duty on thirty-one items is to be removed over time in keeping with our commitment to CARICOM.  This waiver of consumption tax will cost the Treasury more than $3 million dollars between May and December of this year.

Land for Farmers

The government has not stopped there.  Recognizing that the cost of living is also a reflection of supply-side constraints, the government has commenced the distribution of lands to farmers in the hope that they will grow food, particularly fruits and vegetables.  The more we boost local production, the less vulnerable we will be to fluctuations in the external market for these items.  Beyond land, we must encourage agricultural production through concessions on agricultural appliances and implements.  We have to subsidize irrigation, and help in building an appropriate market infrastructure.

Safety Net

The Federation has been spared some of the harshness of an increase in the cost of living because of the well established safety net we have in place.  This includes free medical care for the young and aged and those with chronic diseases, assistance with school uniforms, free transportation to school, and government payment of examination fees and the provision of school text books.  It also includes welfare assistance to the poor and indigent including the waiver of electricity payments. ~~Adz:Right~~

However, it is unfair to expect that the government alone can resolve the cost of living problem, which is created by conditions outside our jurisdiction and outside our control.

The Private Sector’s Role

We also need the private sector to rise to the occasion and take responsible actions to help contain the cost of living.  Can they work together to achieve lower costs through bulk purchasing, joint shipment and insurance and pass some of this saving on to consumers?  Can they be more judicious in their sourcing of products?  Can they find creative ways of adding more value to the shopper’s experience?  Is this not a propitious time for us to be able to scrutinize their consumer charters? Is it time for the Chamber of Industry and Commerce’s membership to subscribe to a business ethics code?

What can individual consumers do?

As consumers go about their shopping transactions they need to exercise common sense and discipline.  Consumers ought rationally to compare prices across supermarkets and distributors and support those giving them more value for their hard-earned dollar.  Comparison shopping has to become a habit.  The Department of Consumer Affairs is making life easier for those interested in comparison shopping by producing a publication that provides comparative prices on selected items across supermarkets.  All persons interested in receiving this by email can contact our Department of Consumer Affairs.

As energy prices are a heavy portion of the cost of living, we have to practise more conservation of electricity and water at home and at work by avoiding waste and unnecessary use of electricity, regulating our ironing time, turning off our televisions before we fall asleep, and so on.

We have to review our credit status, making a concerted effort to live within our means.  We should regulate our use of high interest-bearing credit cards, overdrafts, etc. and where possible, pay off high-price debt.

While the cost of living will continue to be a challenging issue across the world, we in St Kitts and Nevis can mitigate the unfavouable consequences on our lives by reorganizing our consumption patterns, by proper budgeting, and by exercising common sense and discipline.

The Labour Administration will do all it practically can do to minimize the high cost of living.  But we must all help ourselves by addressing the question “What can I do?” starting today.