Kerr: Don’t panic because of inflation
Despite price inflation taking place on domestic and international levels, a local economist is saying Bahamians should not panic, but instead view it as a positive indicator of an improving economy.
President and CEO of Providence Advisors Kenwood Kerr told Guardian Business yesterday that a red flag shouldn’t be raised.
“Inflation is increasing and it’s actually a good sign to a degree, because it means consumption is picking up and more people are probably being employed,”Kerr said.”It shouldn’t be viewed in a negative sense because it’s an indicator that things are slightly improving.”
Inflation is already being experienced in the food sector, with an official from the Ministry of Labor and Social Development confirming with Guardian Business yesterday that a majority of breadbasket commodities received a price hike on Monday. These items include cooking oil, flour, margarine, mayonnaise, corned beef, sugar, butter, evaporated milk, grits, rice, tomato paste and cheese.
Predictions were also made
about food prices rising as much as 40 percent over the next six months, with one local producer saying imports have tripled in the last two months. Kerr said inclement weather conditions in the United States are playing a role in the recent inflation, but isn’t necessarily the primary reason for it.
“In the U.S. the weather conditions aren’t favorable and to an extent the current situation can be blamed on the bad weather,”he said.”But assuming that was not the case, if there was a high demand then you certainly would still see inflation.”
Kerr mentioned that inflation will not have a significant effect on the purchasing power of the Bahamian dollar in the short term, but he insisted that any economic challenges that occur in the U.S. will certainly create a domino effect.
“The better the U.S. economy is the better we will do,”he said.”The two pillars of our economy are foreign direct investment and tourists visiting and we have our fair share from the U.S. If they have more disposable income, then they will travel more and consumer confidence will rise, which will benefit us. There’s no real need to worry.”