Local Court Sports Business Caribbean Travel Magazines Festival Pulse Home / #BTColumn - Inflation is affecting all of us #BTColumn - Inflation is affecting al Article by Barbados Today Disclaimer: The views and opinions expressed by the author(s) do not represent the o TODAY. Read ePaper island Ads by optAd360 a COURT TODAY BARBADOS TODAY.bb Drug addict to spend nine months in jail after tricking people out of money Top tier Residents urged to stay vigilant as Tammy slows on course to pass north of Money, productivity lost due to poor building maintenance-expert Barbados prepared to host 2024 T20 World Cup finals By Michael A. Callender It was announced yesterday that Fitch Ratings, the agency that ranks the credit-worthiness of borrowers by rating their debt or other securities using a standardized ratings scale, has assigned Barbados a rating of 'B' and a stable outlook to the sovereign debt grade. The agency cited a number of reasons for its decision that included enhanced growth prospects amid the recovery in the tourism sector, the achievement of a new IMF program in September to support reforms after the conclusion of a successful one June, and an improving fiscal situation. Standard & Poor's had earlier given Barbados a credit rating which stands at B- with a stable outlook. Well, what does that means for Barbados? You can say for starts that it is a relief from the days when we were told with monotonous regularity that our long-term foreign currency sovereign credit ratings were lowered because the country's fiscal adjustment fell short of stemming another increase in debt to GDP, which was already very high and a key credit constraint; and that the Central Bank financing of the government's deficit continues, exacerbating Barbados' financial and external weaknesses with the outlook for the country remaining negative. That being said, the number of employed persons in Barbados increased to approximately 126,000 in the second quarter of 2022 from an approximated 123,000 in the first quarter of 2022. The Consumer Price Index (CPI) in Barbados increased to 224.40 points in July from 222.90 points in June of 2022. The CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Another adjustment was in the cost of food which increased 17.4 percent in July of 2022 over the same month in the previous year. The last set of statistics quoted is not at all a surprise given what we all know, that is, the cost of everything is skyrocketing not just in Barbados but all around the world people are burdened with increased cost of goods and services. Nobody wants to pay higher prices for anything. We know we are in big trouble when we see the price of used cars on the rise, when in reality the value of a car depreciates each time that we turn the key in the ignition. We can't really assign a pass/fail grade to the government when the runaway prices that we are facing is driven mainly by imported inflation. I am inclined to address inflation as a global issue because regardless of what monetary or fiscal adjustments we make in relation to inflation the economic ship will still have a difficult time navigating the turbulent waters because we are a net importer. The inflation rate for the 10 years leading up to 2021 was on a downward trajectory, but all of this was upended with a chain of global events leading off with the pandemic that hit us in 2020, and more recently the war in the Ukraine. It goes without saying that governments worldwide pumped insane amounts of money into the economy in response to the pandemic at a time when there was a disruption in the global supply chain due to strict Covid-19 protocols that brought the world to a standstill. Consequently, a surging demand for consumer goods when the supply chain was disrupted, and too much money was chasing fewer goods, that scenario created a powerful concurrence of factors to trigger the avalanche that brought on inflation. Surging commodity prices due to the war in Ukraine is also a contributing factor in what we are experiencing. The cost of everything is spiraling out of control and we are all paying a lot more for the same exact things that we were paying for a year ago. Russia is the largest producer of crude oil after the USA and Saudi Arabia, also credited largest crude oil exporter along with Saudi Arabia, and don't forget that Russia is the largest exporter of oil. The Ukraine is the world's largest producer of grain and a disruption of any of these commodities can throw the world economies off-kilter. Containers now spend twenty percent more time in the system, because they are held up in congested ports, and there is a shortage of labour in the transportation industry which limits equipment and transport capacity relative to the volume of trade on demand. Governments have raised interest rates to slow the pace of inflation, that is a balancing act that is difficult to implement at times because you still need to keep interest rates low enough in order to keep the economy afloat. Increases in interest rates over time will definitely slow down the rate of inflation, but there could also be negative consequences brought on from slower economic growth and higher unemployment. In light of all that was said above, what can a country like Barbados do when we have little control over external factors? We cannot pull the strings to effect change in the global marketplace so we have to sit like a passenger on a bus, without brakes, heading down a hill at 'break-neck' speed just hoping and praying that our last redeeming effort, the emergency brakes, will not fail us. This column was offered as a Letter to the Editor. Read our ePaper. Fast. Factual. Free. Sign up and stay up to date with Barbados' FREE latest news. Share Tweet Share Like 10 1 Barbados Today firmly discourages any commentary or statements that are libelous, disruptive in nature or incites others to violate our Terms of Use Any submissions made on our comment section, are solely the views of the individual and not Barbados Today