EDITORIAL – Seek solutions as cost of living continues to rise

“The news is grim. Figures show the cost of living in the Cayman Islands is still increasing. And there aren’t any promises on the horizon of the trend reversing any time soon.”
– Compass editorial, 10 March 2006

For more than a decade, this editorial board has written about the high cost of living on our beautiful islands. Year after year, sometimes even more frequently, it has noted that basic goods and necessities have gotten progressively more expensive, called on readers to be thrifty and called on government leaders to do what they can to control growing costs – while acknowledging that might not be very much.

It has floated ideas for potential relief, such as reducing or eliminating duty on household necessities or lowering the cost of energy and fuel. It has encouraged residents to stretch their money in creative ways, recommending everything from buying local meat and produce, to cutting back on alcohol and tobacco, to being mindful of electricity use. But still, today, many are feeling the pinch, and no wonder.

As the Compass reported this week, recently released figures from the The Economics and Statistics Office Consumer Price Index show that the average inflation rate reached 3.3% last year. That bump follows a 2% increase in 2017. Even the relatively bright spot of 2016, a rare year during which we experienced deflation (0.6%) was a short reprieve from steadily growing costs.

Indeed, a Compass graph of annual inflation rates between 2000 and 2018 show only three years of deflation – 2009, 2015 and 2016. In every other year, averaged costs rose, from as little as 0.28% in 2010 to an astonishing 7.29% in 2005.

Digging deeper into the figures, we find the ‘usual suspects’ well-familiar to us from years of tracking this issue:

Since 2008 food prices have increased by more than 34%, household equipment and clothing by more than 23% and 22%, respectively. Transportation costs are up 20%, education, more than 17%, and health-related costs, nearly 7%. Interestingly, during the same period, housing and an energy costs shrank.

We understand that these broad-brush figures gloss over fluctuations in inflation and differences in individual households’ spending habits and needs. Still, it must be acknowledged that life on our islands is getting progressively more expensive. For those people whose incomes have risen concurrently, the increases may have gone largely unnoticed. Those whose incomes stayed steady or declined are getting squeezed.

Which leads us again to the question: What, if anything can be done? The answers, while imperfect, remain largely unchanged.

Government could mind its own spending to reduce the need for revenues, which would enable it to exempt or lower the duty for foods and other necessities or reduce the number and size of fees paid by residents.

Individuals can similarly watch their spending, or actively seek opportunities to grow their earning potential.

In all likelihood, it will take some combination, as well as other creative ideas, to ease the pressure of rising inflation for those who are genuinely worried about making ends meet.