Dear Editor,
Inflation (price appreciation) around the world is measured by a physical basket of goods people rely on for sustenance (monthly, yearly), shelter and the cost for services are also included. It will be interesting to validate what is in the basket of goods our government uses to measure local inflation both wholesale and retail and the sources. Yes, inflation around the world has risen because of supply chain disruption, shortages, wage increases, tariffs, shipping cost and some residual effects of COVID. Guyana’s cost of living is driven by the availability and cost of labour in the private sector and lack of income growth and productivity in the public sector.
I am glad my economics studies were not in socialist Russia, where central Government controls are the keys to economic prosperity for some. In 2019 I bought 90 truckloads of sand at $19.5k a load. Today it is $30k, a 50% increase in 5 years. Have average wages grown by 50% in the past 5 years, No! This is not a PPP/C or APNU issue it is a people issue.
Guyanese are complaining about the cost of living across our country rightfully, the basket of goods (data) used for measurement may be flawed. The existing subsidies (fuel, water, etc.) mask the real growth in inflation (prices). The average person feels it because the underground economy never previously measured appropriately is really where the price rises are. Those that never bought fish, beef, bora, shrimp, mutton, tomatoes, rice, sugar, cement, sand, plantain, pumpkin, and other vegetables, themselves would never know. These are not imported items except cement. There is more money in the Guyana economy chasing the same amount of goods (lack in productivity growth), likewise a growth in our population through migrants. It is like our electricity deficit; we react versus being proactive.
There is convincing evidence price appreciation over the past 4 years is significant. Any economy with a significant growth in (GDP) and its money supply (Government spending) will always have a challenge without the requisite adjustment in wages and productivity. That is the conundrum once wages are raised, so the dog chases its tail. Guyanese leaders have a big challenge how to grow wages and productivity at the same time. However, we miss the big picture (cash grants, housing subsidies, exemption on some items, etc.) are temporary socialist ideas. There is an underground supply and demand economy which the Government is unable to discern since we are using 2002 methods to measure a 2024 economy. I penned previous articles on our currency valuation, purchasing power parity and BoG intervention. Revolutions are fermented based on the pocketbook issues, perception of corruption, rule of law and lack of security within Nations.
Sincerely,
Everton D. Morris
