Price increases of everyday goods may already be impacting some Bahamian pocketbooks, but Minister of Economic Affairs Michael Halkitis said if it were not from the government’s reduction of value-added tax (VAT) to ten percent, local consumers would have been paying more.
The United States’ consumer price index climbed to seven percent last month, making it the largest 12-month gain since 1982.
Since the US is The Bahamas’ main trading partner – the provider of more than 90 percent of locally consumed goods – Halkitis said a price spike is inevitable, but will hopefully smooth out in the coming months.
“As you know, we import most of what we consume here in The Bahamas and so prices have been going up due to certain challenges with the supply chain. We’ve seen it at the highest level for quite a number of years in the United States, where they are experiencing issues with supply and prices going up as a result. So that’s imported. Hopefully it works itself out over the next weeks and months so we can see a reduction, but it is a function of imported inflation,” he told reporters yesterday before the weekly Cabinet meeting.
“Be reminded now that VAT went down from 12 percent to 10 percent on thousands and thousands of goods and services. As a matter of fact, the reduction in the rate of VAT would have resulted in the prices not going up as much than if it had stayed at 12 percent. So, we don’t think that’s a factor at all and it’s contributing to the prices not going up as high as they can.
“But if you look at the United States, I think the inflation rate was about seven percent (in the last quarter) which I think was the highest in something like 30 years. So we being an importing country will feel the effects of that and as I said, hopefully in the coming weeks and months that will work itself out and we will see a reduction.”
Last week, Central Bank Governor John Rolle cautioned Bahamians to prepare to pay more for their everyday consumables heading into 2022.
It is estimated inflation will rise as much as two percent locally this year.