While the Government contends that the economy is on the rise, at the grassroots level consumers continue to feel the squeeze; with the Ministry of Finance’s own mid-year report finding that it is food prices that are actually on the rise.
Increased cost of living has been recorded by the Ministry of Finance
According to the report, the inflation rate from December of 2018 to June 2019 reached 1.6 per cent, which the report says was “moderate”. But behind this marginal increase is an increase in food prices.
“The 12-month inflation rate at the end of June 2019, which grew to 2.4 per cent, was driven mainly by higher food prices. Over the 12 months, these prices rose by 6.3 per cent, and affected 2.5 percentage points of the increase in the Georgetown-based Consumer Price Index (CPI),” the report states.
Meanwhile, the CPI itself shows that the average cost of living rose to $118,000 per month at the half-year mark, compared to the $116,000 it was at last year. This includes cost for food, clothing, footwear and repairs, housing, furniture, transportation and medical care and miscellaneous goods and services.
All of this belies the Government touting consumer confidence in the economy. When he presented the mid-year report earlier this month, the Minister of Finance had said that the report shows strong confidence in the economy. He had strongly denied that there was a slump.
“You have no evidence of this slump. None from the Bank of Guyana (BoG) or anywhere but you hear these figures being trotted out. It will show that net domestic credit has expanded by 14.1 per cent by the end of June, and this has been driven by Private Sector credit expansion of 5.7 per cent… Lending to households increased by 13.5 per cent, and this was driven by lending to the housing sector, lending for motor cars and other purchases… Real estate mortgages grew by 5.7 per cent. The fastest growth in the last three years and this was driven by lending for private dwellings and industrial and commercial properties,” Jordan had said.
The mid-year report had taken note of increased expenditure on the import of food. According to the report, expenditure on consumption goods, which include food and electronics, grew by US$2.2 million to reach US$236.8 million. The report attributes this to an increase in the importation of perishable and semi perishable items.
Total imports increased by 31.6 per cent to US$1.371 billion. On the other hand, revenue earned from exports was US$743.8 million. A breakdown shows that imports of intermediate and capital goods showed increases.
“Imports of intermediate goods expanded by US$170.4 million to US$706 million, driven largely by other intermediate goods, chemicals, parts and accessories imported growing significantly on account of oil and gas activities,” the report states.
“There was marginal growth of 1.1 per cent, or US$2.6 million, in the imports of fuel and lubricants. Imported capital goods increased substantially, by US$155.2 million to US$423 million, primarily attributed to a substantial expansion in mining machinery, again, supported by oil and gas activity.”
When it comes to the overall economy, the Bank of Guyana’s recently released first-quarter statistical bulletin had shown that nearly all the major productive sectors declined. For instance, sugar experienced a major decline of 34.3 per cent, owing to the restructuring process the Guyana Sugar Corporation is undergoing.
On the other hand, the decline of rice output by 9.3 per cent was attributed to the rice bug infestation and the increased costs of production. The mining and quarrying sectors exhibited lower production. According to the bulletin, there was a 4.9 per cent decline in gold declarations.
