As we seek urgent strategic solutions to tackle our novel coronavirus community spread, our peripheral vision must recognise and begin planning for the other imminent crisis waiting on our doorstep — inflation.

Regardless of the bubble you’ve chosen for protection, it would be difficult to escape the reality of surging retail prices for food, goods, and other commodities. These increases will not get better any time soon as massive disruptions to global supply chains have caused severe delays on the delivery of goods to the global marketplace.

As a result of the pandemic, last year consumer demand plummeted as stores closed with wide scale lockdowns. However, with thousands of people working from home, a surge in online purchasing, and the United States Government pumping stimulus cheques into the hands of consumers, the demand for goods recovered with a vengeance faster than expected for the last quarter of 2020. The increase in money supply, with a low interest rate environment, resulted in higher demand without a corresponding increase in the production of goods. The result has been higher prices.

To make matters worse, these spikes in consumer demand, as well as the reduction of staff at some of the world’s largest shipping ports, also created the opportunity for shipping companies to raise freight rates by over 400 per cent. Shipping container costs from the world’s largest manufacturer, China, increased from $2,500 per container to $15,000. Invariably, the result of supply chain disruptions, Americans having more money and less goods, and increased shipping costs, led to an overall increase in global commodity prices. Everything went up — metals, steel, aluminium, meat, corn, and cooking oil.

Last month the US White House more than doubled its forecast for annual inflation in new projections as these supply-chain disruptions continue to put increased pressure on commodity prices. The Office of Management and Budget said it “expected consumer prices would rise 4.8 per cent in the fourth quarter from a year earlier, up sharply from the two per cent rise that the [Joe] Biden Administration forecast in May. Officials are hoping that these inflationary spikes will be short-lived, some see those price pressures quickly abating next year, with the consumer-price index rising 2.5 per cent in the fourth quarter of 2022, more than the 2.1 per cent they expected in May, and reaching 2.3 per cent in 2023”. ( The Wall Street Journal, August 2021)

Further away, inflation in the eurozone hit its highest level in almost a decade as a result of supply shortages of semiconductors and other important manufacturing components. Today consumer prices are three per cent higher over last year, the most stinging rise since November 2011. Prices rose 4.7 per cent in Belgium, 3.4 per cent in inflation Germany, and 2.7 per cent in the Netherlands.

Here in Jamaica we are heavily dependent on imports and our cost of living is primarily a function of three indicators — the exchange rate, the cost of fuel, and food commodity prices. All of these indicators are heading in the wrong direction for Jamaica.

The full impact of this crisis has perhaps been delayed for us because the world is enjoying low interest rates. However, South Korea became the first economy in Asia to raise interest rates since the beginning of the pandemic. The Bank of Korea increased from 0.50 per cent to 0.75 per cent — a signal that its policymakers forecast rising consumer debt and inflation as bigger threats to the economy than the resurgence of the virus driven by the Delta variant. ( Market Watch, 2021)

Red flag

As inflation continues to increase around the world, Jamaica must take this as our red flag warning and chart a course in anticipation of this dilemma. With COVID-19 local lockdowns, curfews, contraction in tourism, pressure on the exchange rate, increased costs of fuel and food commodity prices, decreased business production, and staff layoffs or country is heading into deeper crisis.

Unfortunately, these realities do not present many available options to a country in which most of our people are not surviving on minimum wage, which is $7,000 or US$47 per week.

Two months after the pandemic began, 62 per cent of Jamaican households reported earnings below the minimum wage. The majority of food consumed by Jamaicans is imported, including basic commodities such as rice, chicken neck and back, kidney, liver, and mixed vegetables. As a result, any increase in the exchange rate increases the cost of these items to our people.

There is no doubt that the impact of inflation hurts everyone, but it is devastating on the backs of the poor who already cannot find the basic money required for shelter, transportation, utility, and food.

Recently, the Opposition spokesperson on finance Julian Robinson highlighted the sobering case of food price increases on imported and other basic foods which, in some instances, have moved by 50 per cent.

If we assume that an average meal costs $350, the average person could spend $700 to eat twice per day, or nearly $4,900 per week. This is 70 per cent of their weekly salary in food alone. It is truly impossible to expect anyone to sustain or adequately provide for themselves and their family on the current minimum wage of $7,000.

Martin Luther King Jr was purposeful in his declaration for the need of fierce urgency when confronted with decisions that impact masses of people: “There is such a thing as being too late. This is no time for apathy or complacency. This is a time for vigorous and positive action.”

We need to urgently increase the minimum wage threshold with a focused plan to protect the poor during this time. Furthermore, as I have said previously, the Government needs to be more proactive and adopt the Caribbean Policy Research Institute’s (CaPRI) call for Parliament to pass the National Assistance Bill to replace the Poor Relief Act (1886). This would give a “coordinated approach to poverty reduction through an authoritative multi-sectoral institutional framework which effectively coordinates service delivery” through overarching legislation for social protection.

Commodity prices will continue to rise. As leaders we must move quickly with decisive action now to prevent further damage to our society from this inflation crisis. If we are late, or fail to act, we will threaten the future growth and stability of our country and keep too many of our people in visceral poverty for generations.

Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member.