Inflation continued to plague Cayman through COVID

| 08/04/2021 | 64 Comments

(CNS): According to the Economics and Statistics Office’s third quarter report, the gross domestic product fell by around 8.2% in the Cayman Islands but Caymanians were still facing inflationary pressure from price increases. Available indicators show that the challenges the Cayman Islands faced at the end of last year, nine months after COVID-19 arrived here and some ten months after the virus emerged as a potential global threat, were not just fuelled by the health crisis but also the continued cost of living.

While the economy was wavering and people were losing their jobs, there was no sign of any relief from the inflationary pressure Cayman remains under. The largest decline for Cayman’s economy was the hospitality sector and retail, while the financial services helped Cayman stay afloat as the sector, which is the largest contributor to GDP, contracted by only 0.7% during the period.

But one of the most significant challenges for people in Cayman during 2020 was that inflation continued to grow, despite the impact on their ability to work during lockdown and the closed borders. According to the average annual Consumer Price Index for 2020, inflation was up by only 1% compared to the previous year, but massive drops in some areas disguised the actual pressures people were facing with price increases.

The CPI shows that inflation was running the highest with goods and services that hit ordinary people the most during the pandemic. Communication increased by 5.9%, just as people were more dependent than ever on the internet and phones to work and allow their children to take part in online school. Food and drink grew by over 5%, and housing and utilities increased by more than 4%.

Where inflation fell, thereby lowering the average rate, this was largely in sectors such as transport, especially air travel, when no one was flying, giving a misleading impression of the cost of living. These drops had little impact on most people, who have seen the things they actually need continue to increase in price.

Inflation is one of the greatest challenges for the Cayman economy, but speaking on the Chamber of Commerce Forum this week, Roy McTaggart, the current finance minister and leader of the PPM, claimed that there was very little that government could do to address inflation in Cayman because the bulk of the products we buy are imported.

Despite the fact that government controls the rate of duty and manages the policies to encourage or discourage local produce and manufacturing, McTaggart said that we import all of the everyday things we consume and so we also import inflation. He suggested that having more medical tourism or solar on people’s home could reduce the cost of living. But he argued that the solution was to upskill people and increase their earning potential.

Tackling inflation and the issue of the cost of living has been a primary issue on many candidates’ platforms and a number of the candidates have presented solutions for controlling inflation. These have included re-examining how duty is charged and on what, subsidizing backyard farming, creating a commercial ganja sector, and encouraging new green economies, such as by making homes self-sufficient through solar panel installation and encouraging small scale green manufacturing like local upcycling, recycling and reusing services.

See the CPI report here and the GDP third quarter report here.

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Category: Economy, Politics

Comments (64)

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  1. Anonymous says:

    When Govt. Takes off duties , they should notify the businesses and tell them they are expected to pass it on to the comsumers. For most times if not all times its not passed on to the cimsumers, it just makes bigger profits for the businesses

  2. Anonymous says:

    It is speculated that the no limits quantitative easing going on in the US will eventually drive inflation to Venezuela levels. The US just spent 3.5 Trillion on supposedly covid costs and the government is now talking about another 3 Trillion in infrastructure spending. I don’t know if there are interests intentionally trying to break the system so they can advance a new system (great reset) but most people instinctively realize you can’t simply print money forever without major consequences.

  3. Anonymous says:

    People, this is happening everywhere in the world, Cayman is just now catching up. Anywhere in Scandinavia, the UK,…. Canada s House prices have neerly tripple in 30 years. This is the world now it is a feirce competition: educate yourself, show up on time, don’t call in sick and up your gains or you have no chance

  4. Anonymous says:

    If u Guys think prices is high in Grabd, you should check the Brac, the prices is double here

    • Anonymous says:

      I don’t shop in Grabd but I sure see the prices going up here on the Brac! It’s scary….. and sad.

  5. Anonymous says:

    If I can’t pay $10 for a pack of refrozen sausages that sell for 89 pence in Tesco’s then I’m not buying them

    Supermarkets and the wholesalers are of course at fault, they set the prices they charge. However, you’re not forced to buy the crap!

    There’s also nothing, absolutely nothing stopping a coordinated weekly purchase of goods in Miami and sailing them down, distributing right out of the container at a drop off point…the internet makes it rather easy…bulk dry food purchasing…and the. Occasionally treat yourself to a $5 apple at hurleys

    Broader point, cost of living here will lead eventually to open revolt…its

    • BeaumontZodecloun says:

      I’m in the same boat, but revolt against whom?? What, storm the Port or government buildings or the supermarkets?

      I think various entities around the world are using Covid as an excuse to screw us all, and guess what, the Cayman Islands are downhill. Part of it is the cost of fuel to get goods here, but another aspect of it is pure escalation of prices in the U.S., particularly with highly coveted goods.

      I think we all need to begin growing our sustenance as much as we can. When I lived in a small apartment, I could still grow cherry tomatoes and other things in a container.

      I eat feral chickens. There are some from certain areas of the island that I wouldn’t eat, because I don’t like what I see them eating. Green iguana is tasty. The DOE has assured us that shore fishing is still allowed in most areas. We are not without resources, however all those things require a bit of a return to our roots.

      In some ways, I see that as a good thing. Maybe if we simplify, we don’t need more roads and more elite hotels.

      • D. says:

        Another good one, Beau! I’ll pass on the chicken and Igs, but I am trying to get a few things growing in the garden that wifie and I can eat. Been thinking about starting to take a few creatures from the sea again, too.

  6. Anonymous says:

    Quit meat and dairy, save hundreds a month on groceries…and live longer.

  7. Anonymous says:

    This is by far the most expensive place on the planet. I once saw a tin cup at fosters for 49.99!
    Luckily with overdevelopment, the silver lining is that at least rent and real estate costs will come down due to oversupply!

    • Anonymous says:

      You haven’t travelled much, have you?

      • Anonymous says:

        I have and still do for a living, although it is not easy right now.
        Having spent 16 years in Cayman, I can tell you with ease that it is the most expensive, non sustainable places I have ever lived in. This is compared to other places I have lived such as Abu Dhabi, Colombia, Costa Rica, Bali and Croatia. Whilst greed and local monopolies can be partly blamed, the inability to tax directly and be forced to play with immigration for revenue is a road to nowhere right now. As most can see, when people leave unexpectedly or are forced out, the govt revenue train takes a hit.
        Forcing the property prices and rents to post ivan highs only benefits those that leave, rent out the property and live on a tax free income. This was my method at cutting down my living costs and has so far worked well.i could have stayed, gained PR but equally, be bled dry financially.

        • Anonymous says:

          What on earth are you on about? Living costs are more or less the same here as any expensive city like London, Geneva, HK, Tokyo or NYC. Factor in income tax and Cayman is half the price of those places.

        • Anonymous says:

          And how did your greed afford you the opportunity to travel the world?

  8. Anonymous says:

    I would love to know why gas prices have just jumped by another 20c, it was only about a month ago that they increased by 25c. A 45c increase in less than 2 months is ridiculous and definitely not in line with global prices.

    • Anonymous says:

      Ever Given got stuck in the Suez. And the 1B$ settlement has not been paid.

    • Anonymous says:

      Whenever we visit Cayman we note that the fuel prices are the only thing which are lower than in the UK (and maybe duty free spirits, but you can only buy those at the airport on the way out). Otherwise the prices are things we take pictures of and post on social media they are so far removed from anything you’d pay in Europe or the US ($5CI for a bag of Tesco oven chips, anyone?!)

      • Anonymous says:

        Duh. Who ever would have guessed frozen goods from the UK are expensive on a Caribbean island. Get a grip.

  9. Jotnar says:

    “Roy McTaggart… claimed that there was very little that government could do to address inflation in Cayman because the bulk of the products we buy are imported”

    Roy may be a CPA, but he is certainly no economist and clearly his UCF degree either did not cover basic economics or he has forgotten it. The theory that inflation here is entirely attributable to inflation in the countries of origin only works if the inflation rate here is consistent with that in the supplier country. How does Roy make his theory align with the fact that gas prices here remain static or even go up when they reduce in the US, for example? Or that the price of goods in stores here exceeds the price in the US, not just by the cost plus shipping, duty and a modest profit margin for the local supplier, but by multiples of that number?

    Could it just possibly be a perfect storm of a) government imposed regulations and requirements driving up the price of doing business in Cayman b) oligopolistic and cartel behaviour by our merchant class and c) a complete failure by our regulatory authorities like OfReg to control price gouging and cartels? Of course, any of those explanations would require CIG to admit some degree of fault, so I guess perhaps it is not much a lack of understanding as a lack of understanding as political expediency coupled with a distinct desire not to risk the boat.

  10. Anonymous says:

    Water Authority is another quiet money sucker. So many ppl, myself included have noticed they doubled the water bills due this month. We are being ripped off by everybody.

    • Anonymous says:

      WAC has not doubled their rate. The “new fee” has always been charged, it’s just being separated for transparency. Example, a bill for $50 is still equivalent to a bill saying 25+25.

      You pay about 2-3 cents for a gallon of tap water. This is literally 100x cheaper than buying it in plastic at Foster’s.

      • Anonymous says:

        My bill went from $93 to $203, my cousin’s bill went from $109 to $500+ only to revert back to normal rate the next month. My coworkers bill went from $62 to $127.00. How can this not appear fishy?!

    • Anonymous says:

      Maybe you have a leak. Rates haven’t increased since 2019. The only recent change to rates was to break out the Statutory Fee from the base rate. The Statutory Fee is supposed to cover statutory duties undertaken by the Authority such as ground water protection and development control (permitting and checking sewage treatment plants).

      Maybe someone from WAC can elaborate and or correct me if I’m wrong on this.

    • BeaumontZodecloun says:

      Water Authority and propane are still the very best deals we have going here.

    • D. Truth says:

      And don’t forget the effing electric company!

  11. Anonymous says:

    There is no transparency. The elephant in the room that no-one wants to talk about is that same families that own the food distributors own the food retailers, i.e. the supermarkets. Supermarkets around the world made records profits last year, no-one knows the profits made by the supermarkets here. There is simply no regulation. Wild west animal instinct capitalism and the consumers suffer.

  12. Anonymous says:

    Everyone blaming the grocery store owners, but when is anyone gonna put the blame on the duties that we’re paying on these essential items….we’re basically paying the government to survive.

    • Anonymous says:

      Why to we always have to blame others? The price of consumer goods have gone up during COVID-19 largely because of disruptions to the production and distribution channels, but also because of increased demand. What do you do when you’re locked down? You eat and buy things to make your home more livable. More demand brings higher prices.
      Personally, I spent a lot less in 2020 in spite of paying higher prices at the supermarket because my entertainment expense (which includes eating out) went way down.

    • Anonymous says:

      I can buy on Amazon, pay ocean freight and tariffs while still being 30% cheaper than a local grocery store for almost any dry good. The tariffs are too high for sure, but there is also a lot of price gouging on the island. The real shame is the fact that healthy fresh foods are even worse. Whole Foods strawberries in Miami are 3.69 USD per pound in Cayman you pay 12 USD. Does it really cost 3x more to get strawberries from Mexico to Cayman vs. Mexico to Miami. I think not.

      • Anonymous says:

        Mexico to Cayman via Miami for those strawberries. (Plus the cost of refrigeration. You remember why compared to dry goods in the first place.) You also don’t have the overhead of building, employees, etc. So you’re comparing strawberries to raspberries when you compare your costs to the merchant’s costs. I knew one ‘dry goods’ retailer that figured a 100% markup on purchase cost was what it took for them to make a small profit on an item. So I can see it being much more than that for something like strawberries.

    • Anonymous says:

      8:35 am, when Govt. Takes off duties on certain items, the price goes up. In the Brac Govt. Took off the 12 1/2 cents duties on Gas, the price at the pumps went up 17 cents

  13. Anonymous says:

    Housing prices are probably the most ridiculous things affected by inflation here. They’ve probably doubled in the last decade, and most of that has been in the last couple of years.

  14. Anonymous says:

    Inflation as a result of a successful economy is not such a bad thing. The alternative, falling prices is usually the result of mass unemployment and recession. Furthermore n a free economy government has little control over prices; price caps ALWAYS lead to shortages… Be careful what you wish for.

  15. Anonymous says:

    We are on a path to destruction on this island. Locals are pushed out of seven mile and adjacent neighborhoods by prices. Forced to go to noose town sav which still instead cheap by the way. Then forced to fight traffic to get to work and back home. All while more and more apartments developments are being built in the same area. Which will cause more traffic than the road upgrades will relieve.

    • Anonymous says:

      LOL – Locals were pushed out of the Seven Mile Beach area 40 years ago – except for rich Caymanians, of course. I don’t have the decoder ring to read your second sentence, so I can’t comment on that. But… I share your pain on the traffic issue. One of the top priorities of the next government should be to deal with the east-west road network BEFORE all of those new developments come on line. Otherwise… it’s going to get even uglier.

      • Anonymous says:

        I think they were referring to the Noose that used to be hanging off one of the houses in Bodden Town.

  16. Anonymous says:

    The Grocery cartel is crushing the people. Maybe they can influence government with their power and connections and pass something back to the people.

  17. TopaZ says:

    Where did the half a billion dollars go Alden and Joey? poor Roy da Puppet can’t even explain inflation He it goes ROY Inflation isn’t magic nor a force of nature. The government is simply stealing from YOU! 14th April 2021 please vote the PPM OUT Cayman!

  18. Junior says:

    Hurleys is by far the most expensive hole to shop at in cayman.
    Prices through the roof, they never reduce items either. Or rather they reduce rotten fruit and sell it rather than throw it out.

    • Anonymous says:

      Try to understand the cost of doing business in Cayman before you trash a locally owned business.

      • Anonymous says:

        4:28 is just sharing an opinion and describing the Hurleys shopping experience. I’ve also been suckered into buying expensive rotted fruit from Hurleys as well. Who gives a flipping damn if it’s local or foreign owned? Idiot!

      • Anonymous says:

        Try to understand I’ve never consistently bought as much nasty fruit than from Hurley’s.

    • Anonymous says:

      You must’ve never gone to Kirk’s!

      • Anonymous says:

        Kirk’s is pretty expensive but quality much better especially over Hurley’s. Happy to pay more if it lasts.

    • Anonymous says:

      I used to agree with you with regard to Hurley’s. Not anymore. Every store has items that are less expensive than the others. Foster’s is lowest on some items and highest on others. If I’m looking to save money, I keep mental note of the prices and shop at all three major supermarkets. I also look to see what’s on sale at each and plan my meals accordingly.

  19. Anonymous says:

    The supermarkets are way out of control! Outside of my household bills, Foster’s eats up most of my money. 3 little items $85.00 disgraceful.

    • Anonymous says:

      Cost of living is very high in Cayman. Is it practical to import more packaged non perishable groceries from neighbouring countries where the cost of living is much lower? Examples. laundry powders,tinned items and sell by the case?

    • Concerned Caymanian says:

      cuz now Woody gotta pay huge rent to the Dart corporation 🙁

      Your money just ending up in Darts pocket at end of the day so they can buy up the whole island and drive yuh out

    • Anonymous says:

      You bought the Waitrose Easter range stuff?

      RIP bank account.

  20. Anonymous says:

    inflation and tackling the cost of living/doing business in cayman… one of the huge failures of this administration

    • Elvis says:

      I too am always sucker punched with rotten strawberries especially at hurleys. Local or not they suck at rotten fruit

  21. Anonymous says:

    I hope that when a new government is elected come April 14th (I am hoping there is a new government)- that they seriously do something about the HIGH cost of living in the Cayman Islands and CUC monopoly!

    If not, then we shall vote them out next election.

    • Anonymous says:

      Let’s not forget about traffic, we need a proper public transportation system with larger buses, set times that also include evenings, holidays and weekends, and routes without detours.

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