2024 Inflation rate slows but COL still crippling families

(CNS): In the second quarter of 2024, the Consumer Price Index (CPI) was 132.7, which is 1.7% more than the second quarter of 2023, with eight out of the twelve divisions recording higher price indices. And while the rate of inflation may be slowing, given the historic highs over the last few years and the suppressed salaries in Cayman, local families are still crippled by continued price increases. The rate also varies widely with school fees, certain foods, rents and other housing costs, including insurance, increasing by much more.

The latest Consumer Price Index Report from the Economics and Statistics Office shows a year-to-date rate of 1.7%, largely due to the volatile price of oil and fuel, which fell during the second quarter of this year. Given its impact on inflation and the volatility of fuel costs, this means the minor slowdown in the inflation rate could easily be reversed next quarter if the price of oil on the world stage spikes again.

During the second quarter between March and June, the rate of inflation increased slightly by 0.1%, but even a fraction of a percent is adding to Cayman’s unprecedented cost of living crisis, which is now impacting even the country’s more comfortable households.

According to this latest inflation report, the rising cost of education, largely due to increasing school fees for secondary education, increased by more than 9%. While the price of food rose by an average of around 1.8%, certain foods such as cooking oils and fats increased by 6.6%, meat and meat products increased by 4.7%, and bread increased by slightly more than the average overall rate of inflation.

One area that continues to see higher inflation is the cost of rents, which has a disproportionate impact on those in lower-paid jobs. A more than 8% increase in the cost of residential accommodation is not only hurting low-income families but is also making it harder for businesses to recruit low-paid workers, as they can’t afford to live here on the poor wages being paid in many sectors of the Cayman economy.

Labour Minister Dwayne Seymour recently confirmed that he is very unhappy with the recommendation by the Minimum Wage Advisory Committee to increase the minimum wage, even though the suggested new wage was extremely low. Seymour ordered another review of what is now one of the proportionately lowest minimum wage rates in the world.

This means that it could be years before people working for just $6 an hour see a salary increase unless they work in hospitality, where the basic wage will move to $7 per hour next July. Employers will no longer be able to use 25% of the tips, gratuities or service charges earned by their workers to top up their wages.

While inflation and GDP soar, the reality is that the gap between the haves and have-nots in Cayman is getting noticeably worse. The minister’s decision not to accept the committee’s recommendation to increase the basic wage to $8.75 will also suppress wages further up the pay scale.