Uptick in Global Inflationary Numbers Reflects in Belize’s Market
Inflation has been on an upward trajectory for the better part of this year, and economists attribute this to the effects of Covid-19 and the impacts of the raging war between Russia and Ukraine. According to the Vice President of Services at the Belize Chamber of Commerce and Industry (BCCI), Katherine Meighan, these are the key factors that influence global prices to soar which then trickles into Belize’s market. Meighan says that this year inflation in Belize has doubled from 3.2% to 6.1%, which slows down economic development.
Katherine Meighan, Services Vice President, BCCI: “Inflation in 2022 is looking to be 6.1% in Belize as compared to 3.2% in 2021 so that is an increase as you can tell. So what that has directly done of course is affected any business’s ability to be able to run their business and maintain the same profit margins. Typically a business will at least in the initial stages look at ways to cut back on costs, they will also try to see where they can manage and balance in terms of profit margins. They also may make some strategic decisions when it comes to do with withholding back on investments. Let’s put it off until next year in terms of waiting out the flow to see if the inflationary rates will decrease. That of course can also – so it’s slowing down business I think that’s the best way of describing it and in so doing it can affect many angles including employment, including the development of the business itself, adding a new division, adding more offices etcetera and so that does play a role it’s a cycle right as in everything in life.”
Meighan says increasing inflationary prices directly affects businesses’ ability to maintain the same profit margins. She adds that is the reason why most businesses opt to raise prices in order to stay afloat.
Katherine Meighan, Services Vice President, BCCI: “Of course, the area is more affected by inflation based on the statistics that we are seeing is primarily goods and services that connect back to for instance transport, food and in so being the services angle we are looking at restaurants and accommodations being very much affected by increasing inflationary numbers so to say. And I’m sure we can understand that because you know you are going to the store and then potentially seeing an increase in price. Now obviously businesses are going to do that and increase prices for their goods or for their services as a last resort because they understand that the purchasing power is going to be decreased even more if something is going to cost somebody let’s just say $10 more or $5 more than what it cost they may choose not to purchase that item altogether which will affect the profit margins for businesses. So there is this cycle so obviously businesses are going to not want to have to increase the prices of goods and services but if they have no choice in other words in order to stay afloat that may happen at the same time.”
Meighan says that they are hoping this is the peak of inflation and as the global prices start to go down, prices in Belize will start to decrease as well.
Katherine Meighan, Services Vice President, BCCI: “The indicator is that we are somewhere around that peak based on what we are seeing however it’s very difficult for us to give you a black and white answer to that question because obviously global components come into play and actions that governments take abroad and what our government takes to somewhat control the effects of inflation will be influential. So it’s very hard to really tell but each individual component plays a role so for instance let’s just say if a company is trying to manage their profit margins and hold on investments that may affect employment. Employment or a lack of growth in employment can affect the ability for persons within our business community to be able to purchase more than what they are currently purchasing so to say. You make more money you can purchase more you can afford more so there are these cycles, government actions and regulations to control the increase in pricing so it does not affect the development of the economy also plays a role if you look at it from the economic macro flow. International components so what is happening from shipping, shipping costs several months back was sometime 100% higher than where it was before. Now, we are seeing some level of normalization and decreases but the question is will it?”