Inflation one of several threats on horizon

| 15/07/2021 | 120 Comments

(CNS): In his address to Parliament on Wednesday on the PACT Government’s first strategic policy statement, Finance Minister Chris Saunders painted a relatively optimistic picture of figures for public finances and the economic recovery from the COVID-19 fallout. But he also noted some threats on the horizon, not least the problem of inflation. Caymanians are well aware of rapidly rising prices and the expectation that things are going to get worse.

In the figures presented to Parliament, government accountants are predicting a consumer price index increase of 2.1% this year, 1.9% in 2022, 2% in 2023 and 2.6% in 2024, based on forecasts from the United States. However, shortages could see inflation spike further.

Given that the smoothed out average rate of inflation disguises the day-to-day rising prices that ordinary people endure, things could prove very challenging for most workers, who have already suffered a persistent period of increases in the cost of living without seeing an increase in their earnings.

Global inflation was running at 3.2% last year, despite the contraction of the economy due to the COVID-19 pandemic. But here in the Caribbean, inflation was running at 7.7% because of high levels in Haiti and Suriname, and the regional rate is expected accelerate over the next two years, which could easily impact the local predictions.

The SPS also noted other risks that could impact inflation, including vaccination programmes worldwide, the pace of recovery in the US and emerging short-term mismatches in the labour market. “If these expectations remain persistent, they are likely to add additional inflationary pressures over the medium term to the Cayman Islands economy,” officials have warned.

During 2020, inflationary pressures came mainly from food and drink, which rose by more than 5%, which reflected imported price hikes driven by a general increase in all food indices on the international market. This year, constrained global demand over the medium term is expected to support low price levels in the international market, but in reality prices continue to rise here at home across the board.

Crude oil prices are also expected to rise by 21.2% in 2021, though experts believe, despite the reality in the stores, that other prices will not increase much for the rest of this year.

However, local officials believe that Cayman will be importing more inflation in the medium term into 2022, pushing up the cost of living likely beyond predictions.

With government also still depending on construction and development to keep the economy buoyant as it steers Cayman through the ongoing pandemic, it has already raised concerns about the significant increase in the cost of construction materials. Premier Wayne Panton stated at the recent Chamber of Commerce Legislative Luncheon that the government would have to find ways to address that issue.

In addition to inflation, the SPA identifies the continued uncertainty about how the pandemic will play out, including the problems relating to the vaccination rate both here and around the world. It also notes the potential threats to the financial services sector, which remains the major economic platform for the economy and funds the bulk of public services.

“The financial services sector continues to face the increased risk due to changes in regulatory requirements from international regulatory and political organizations. Notably, the addition of Cayman to the FATF grey list and continued talks of the European Union adopting stricter criteria on economic substance could lead to an additional burden on the sector,” officials said.

In the SPS, government outlined plans to enhance the financial services policy functions and the regulatory services provided by the Cayman Islands Monetary Authority in response
to recent international regulatory changes. There are also plans to increase funding to keep the jurisdiction in compliance with global financial regulations and take the steps to remove Cayman from the grey list.

See the full SPS in the CNS Library.


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Category: Economy, Government Finance, Politics

Comments (120)

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  1. ELVIS says:

    Cayman will soon be priced out of the Caribbean market. most expensive everything.
    Genuinely sorry for young Caymanians starting out working and trying to buy their first home.

  2. Anonymous says:

    15 @ 6:37pm – Highest murder rate of innocent blacks by police in history!! RIP Breonna Taylor, et al!!

  3. Anonymous says:

    @3:49 maybe you meant the private sector. Public sector workers do not get an annual COLA and increments have been frozen for years, resulting in significant anomalies in pay scales.
    For example, new workers are able to negotiate salaries and can enter the service at a higher rate than someone with previous years’ service and doing the same work.
    And unlike the private sector, there’s no annual bonuses!
    The truth is, the majority of workers (private and public) are feeling the pain!

    • Anonymous says:

      @ 9:20am I work in the private sector and my company has not given a COLA since 2017. Before that it was 2014 (which really did not amount to anything either time). Trust me you all have it so good working for the Government. You get a decent salary, so much freedom, paid health and pension for you and your families but still complain?! I have to show up on time, and WORK. I actually have to earn my paycheck. The bonus is not even two weeks pay.

    • Say it like it is. says:

      9.29am A trait of many civil servants is to be self-delusional. It was not long ago that you all got a whingeing increase to make up for the lack of COLA adjustments in the previous several years.This happens on a regular basis. Just like our Ministers and M.P’s Mr Manderson can give you increases whenever he feels like it.As for annual bonuses your system just creates new positions with higher salary ranges for existing staff.i.e. annual bonuses.

  4. Anonymous says:

    We should borrow 330 million dollars, that will help.

  5. Anonymous says:

    Nice of the Deep State to warn us.

  6. Anonymous says:

    Sleepy Joe is at the wheel. We have 3 more years of this.

    • Anonymous says:

      Go away with your nonsense.

      • Anonymous says:

        Nonsense? Manufacturing companies in the US can’t find anyone to work because Biden pays them more to stay at home on benefits.

        Meanwhile, under Trump, There was record low unemployment and the economy was thriving!

        • Anonymous says:

          9:55 Remind us when the COVID relief handouts began, Joe was not the US President at the time, perhaps we missed it?

        • Anonymous says:

          It’s useless trying to argue with someone who believes such bullshit so you enjoy the little fantasy land you live in.

  7. Sad but true says:

    And Cayman Airways fares have gone up 300%, price gauging at it’s worst as they have a monopoly.

  8. Anonymous says:

    Whatever inflation the US has, yours is going to be higher. It’s very hard to see how the government accountants came up with a price increase of only 2.1% for this year. Is there an economist in the house?

  9. Anonymous says:

    No mention of fixing the dump in the SPS

  10. Anonymous says:

    And just think about what Dart is doing land-banking half the island! they should introduce an annual tax on land holdings in Grand Cayman greater that 1 acre that aren’t being used.

    • Anonymous says:

      What do you mean by “used”? Can I keep a cow on my land and avoid your tax or do I have to concrete over it? Sounds like one of the dumbest ideas I’ve ever heard.

      • Anonymous says:

        Yup. People love to say you should have to develop land when it’s better that we STOP developing all our land and habitats away.

  11. Anonymous says:

    Premium fuel is now over $5 a gallon.

    Anything vaguely healthy and fresh is already wrinkled, disgusting and about two or three times the price in the USA.

    I know it’s not pertinent here, but many house prices and rents have probably doubled in about the last 6 years. Wages haven’t kept pace with this craziness. You’re now looking at >400k for a cookie cutter 2 bed in an okay area. Tack on another 100k for a nice area. Minimum.

    It’s utterly depressing.

    • Anonymous says:

      Depressing…

    • Anonymous says:

      Double rent is an exaggeration but it is higher for sure

    • Anonymous says:

      5:57 – Premium fuel is only required on premium vehicles that include Mercedes Benz, BMW, Porsche, etc. If you can afford that vehicle, you can deal with the carrying costs. Go cry elsewhere! 😁

    • Anonymous says:

      $5 gas? Meh. About average globally and half that of Europe.

      • Anonymous says:

        The $5 gas isn’t expensive per se, but the point is that it’s expensive relative to the price of fuel here over the last few years. I don’t really care what the price is in Holland or Venezuela.

        It’s the fact that basic staple food stuffs of any decent quality are ridiculously expensive that really gets on my nerves.

      • Anonymous says:

        No one on this side of the Atlantic cares what gas costs in Europe.

      • Anonymous says:

        US$2.49 here in southern US which equates to CI $2.49 per Imperial gallon. (If you ever wondered why the dollar exchange rate is what it is, its the same as the size difference between US and Imperial gallons. This is convenient for certain people.)

  12. Anonymous says:

    Got to love those Bidenomics!

    • StopTheCrime says:

      You forgot about the Trumponomics which also printed money and devalued the dollar and sent debt skyrocketing to record highs… as did every president before them.

      • Anonymous says:

        He didn’t close off the all the federal areas for oil exploration – price of oil is through the roof. Oil companies are loving Biden right now. Me, not so much.

        • Anonymous says:

          Oil prices rising has nothing to do with Biden. But we know presenting facts to fake news lovers is a waste of time.

          • Anonymous says:

            Lol, fool

            • Anonymous says:

              Great points. I’ll take that as you don’t know what you’re talking about. Cheers.

              • Anonymous says:

                Let me explain it to you. Biden has halted leasing of federal lands. This removes the reserves on those lands from the market. Supply is not just oil in tanks somewhere it also includes available reserves in the ground. Supplies were also restricted by blocking a large Canada/Oklahoma pipeline that literally needs only a couple of miles to be finished and in operation. Biden definitely owns the higher gas prices.

        • Anonymous says:

          Poor old Biden. When he was Vice President he didn’t know his AC from his DC! Now he tries to do and say what he is told but doesn’t seem to remember what it was.

          • Anonymous says:

            3:59 At least he’s not going out drunk and beating up women. The speaker of your silly little UK territory is a wig wearing woman battering drunk. I suggest you focus on fixing your own leadership before criticizing the leadership of a real nation.

            • Anonymous says:

              The US is crashing and burning. If the republicans don’t win the next presidential election, the country will be split apart so far it will be half blue and half red. American Vet

              • Anonymous says:

                That’s such a load of bullshit but please keep spewing stuff you have no idea about.

              • Anonymous says:

                8:27 Did an explosion give you a brain injury or did you not serve in combat and only joined the military (if you really did) for the GI Bill? You sound like an angry person spewing garbage.

      • Anonymous says:

        Lowest black unemployment in history

        • Anonymous says:

          Trump era yes. Biden is an empty corpse Weekend at Bernies President but it’s important Biden stays alive because Kamala Harris is an effing moron and twit.

        • Anonymous says:

          Thanks to the economic policies put in place by the Trump administration.

        • Anonymous says:

          wasn’t the lowest black unemployment rate during the Slavery era?
          The Dirty Don’s true goal was to emulate the era again

          • Anonymous says:

            The slave owners were all Democrats.

            • Anonymous says:

              And please explain to us what party the Democrats of back then are now. Because you can’t just say they were Democrats without knowing the history of the parties evolution, but thanks for trying with your gotcha comment.

              • Anonymous says:

                Still the Democrats. Lincoln was a Republican btw.

                CNS: This week’s high school homework assignment for Basic History That Everyone (At Least All Americans) Should Know: Discuss how and why the two major parties in the US have switched platforms over the last 100 years. Explain what happened to the Whig Party. Say which party Lincoln would be a member of if he was alive today, giving your reasons.

          • Don says:

            @ 10:10 am: You just won the Liar-of-the-Month” award. Congratulations!

    • Anonymous says:

      4:25 – Trumponomics bailouts blew away the ones of the 2009 crisis. And he loved bragging about it too! Let’s also not forget how that buffoon was pressing and criticizing the federal reserve for not bringing in negative interest rates. Could you imagine how much worse inflation would be if that crybaby wannabe prez had received his negative interest rates? Please do your research before posting nonsense. Island moron!

    • Anonymous says:

      4:25 – Got to love your idiotics

  13. Anonymous says:

    Price gouging is outrageous here, went to ALT when the TS was scheduled to hit and they’d up’d the price of a leaf blower by $100. You could see the original price still where the overstock was.
    I know Mr T wouldn’t allow this, so who is the thief here?

    • Anonymous says:

      But Mr. T did allow it, so you tell me!

    • Anonymous says:

      How are you so surprised that the man with gates made in the likeness of his last name would allow such a thing? This price gouging will probably pay for the new ALT shrubbery on the front lawn for us plebs to look at.

    • Anonymous says:

      First of all, leaf blowers should be illegal.

      • Anonymous says:

        Spoken like someone who has never cleaned their own yard a day in their life.

        • Anonymous says:

          I do my yard with an electric (quieter) leaf sucker – I don’t push the leaves/dust into my neighbours yard or road for it to blow back into my yard when their gardener comes. For lots of leaves I use a rake & take them to the dump.
          I agree leaf blowers should be banned.

      • Yardkeeper says:

        Why should leaf blowers be illegal?

    • Anonymous says:

      Stop casting aspersions on ALT. He didn’t kill anyone.

      • Anonymous says:

        No but you think everyone was dead that works for him considering how hard it is to find someone to help you in that store.

  14. Anonymous says:

    cig has never been able to tackle inflation or cost of living….they only increase it with their inward loking protectionist policies.
    prime example…joey hew banning uber in cayman.

    • anon says:

      3.49pm Why should they, civil servants regularly get cost of living adjustments to their salaries and their pensions are inflation proof.

  15. Anonymous says:

    Bitcoin fixes this. Downvote all you want but everyday you lose purchasing power from unlimited FED currency printing. The US $ is a ponzi, $27 Trillion is debt

    • StopTheCrime says:

      Preach! People still don’t understand the importance of basing your currency on a hard asset with limited supply (just like every other economy before 1971 when Nixon went off the gold standard). People only think about the last 50 years and not the 10,000 years before it.

      Adding Bitcoin to the country’s reserve would strengthen the Cayman dollar and fight inflation. Prices would actually go DOWN over time. Nothing but positive things will happen… no downside. Not kidding.

      • Anonymous says:

        Insanity

        • StopTheCrime says:

          Watch what happens when the dollar goes down even more and Bitcoin goes up (even more). Logic will soon take over. Dollars are limitless, Bitcoin is hard-capped at 21 million coins, forever. It’s simple math.

          • Anonymous says:

            Inane logic. It has no intrinsic value. Just because the supply is limited means nothing; the number of crypto currencies (4000 and counting) isn’t and as a means of exchange it’s an environmental disaster. It’s a bad solution still looking for a problem.

            • Anonymous says:

              Nothing has intrinsic value, it’s subjective.

              Bitcoin is the dominating network the entire world over, owned and controlled by no company, government or person.

              It’s now legal tender and the most secure computer network trusted by millions.

              As for the environment, it’s majority operated using stranded energy that couldn’t be used by anything else.

              As for the bad solution looking for a problem. You collect your worthless FIAT paper enforced by oil and bombs, have fun staying poor.

      • Anonymous says:

        People don’t understand the gold standard. Yeah, we do. At least anyone with even an inkling of economics does. Do you understand that you don’t have to hold your wealth in fiat cash right? Bitcoin. LOL

      • Anonymous says:

        Actually wouldn’t do much in the short term, the CI dollar is essentially a US dollar. Reserves of BTC would only be helpful if there was a ‘reorder’ of the global fInancial system or the CI dollar was to become unpegged from the USD.. we’re not exactly El Salvador looking to escape the banking cartels.

        • Anonymous says:

          You might be happy exchanging your labor for pieces of worthless paper printed from nothing. But I’ll take the bitcoin, gold and silver.

          • Anonymous says:

            Good for you. The cheer leading for BTC seems more than a little desperate though. If you don’t get paid in dollars and have a few grand in BTC that are worth half what he were a few weeks ago I’ll eat my virtual hat. There’s only one of them too so it’s worth billions. Right?

  16. Anonymous says:

    oh no!….won’t someone please think of the children!!!!

  17. Anonymous says:

    don’t worry…. no-plan-pact are going to solve this by raising the minimum wage……zzzzzzzzzzzzzz

  18. Anonymous says:

    Wellp, price of weed has fallen 50% since Covid, so there’s that.. maybe because everyone and their granneh selling it for 10x the profit.

    Prohibition only keeps it lucrative. Legalise and create another tax revenue stream.

  19. Helpus says:

    OMG going to get worse, how worse can it get. Come on Pact Govt help the poor retired civil servants with a descent pension. They all earned it. When these guys retire they all have their fat pension to receive by lump sum and monthly payments. I am a pensioner living overseas, and want to return but my monthly pension payments will not be able to sustain me. NAU is overwhelmed. We need help.

  20. Anonymous says:

    The moral compass of Cayman’s colluding “business” owners aren’t guided by CPI. Many have been raising prices all through Covid. Cayman needs consumer protection laws, landlord tenant act, legal practitioner regulations etc. It’s the Wild West.

    • Richard Wadd says:

      Of course retail prices are going up. The cost of goods from suppliers has increased, not to mention the cost of shipping, which has damn near tripled in some cases. A container that used to cost under $5k now costs over $14k, and Govt collects Duty on that shipping cost, which is frankly IMMORAL considering that CI has no alternative but to import everything that we consume.

    • Anonymous says:

      Those laws usually result in empty shelves and housing shortages.

  21. Anonymous says:

    And we still only receive $1000 pm and others less.

  22. Anonymous says:

    And the government was warned before they implemented a minimum wage, that all it would do was create inflation.

    well….look at that. Not one economist in the bunch.

  23. Anonymous says:

    Already the price of fuel is insane..

  24. Anonymous says:

    Just wait until we factor in a higher minimum wage and forced employment of unemployables.

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