Cayman Islands residents are facing a summer of significant price increases in supermarkets and restaurants as the impact of COVID-19 and the restrictions on movement hit home.
Labour shortages and shipping delays are among the global factors driving up the cost of living.
And the situation is only likely to get worse, as the international supply chain struggles to meet surging demand from communities across the globe that are shaking off the shackles of lockdown and getting back to business. At supermarkets across the Cayman Islands, grocery prices have been going up since late last year.
Julian Foster, marketing manager at Foster’s, said this would likely continue through the end of the year. He said some products had gone up by as much as 50%.
Meat prices from the supermarket’s suppliers have increased by 10% since May last year, dairy products have gone up 28% and cereal prices have increased by a third.
Apples and oranges, sugar and canned fruit and veg have also seen significant increases. Foster says the supermarket is working to insulate its customers from the impact by looking for efficiency savings elsewhere.
But he warned, “retail price increases are inevitable.”
A variety of factors, ranging from labour shortages in farms, factories and the trucking industry to a shortage of shipping containers and raw materials for packaging is contributing to the global price surge.
“With many countries reopening borders and easing restrictions, there’s a huge demand on markets to deliver product that they simply can’t keep up with,” said Foster.
Beef and chicken wings a ‘luxury’
It is a similar story across Cayman with restaurants reporting significant increases in the cost of food.
A labour shortage at US chicken farms – attributed in part to the loss of seasonal immigrant labour – has led to a near 100% increase in the price of a classic bar menu staple – chicken wings. That’s not the only product that has been impacted, says Caitlin Dunne who runs Fidel Murphy’s and The Kitchen on Seven Mile Beach with her husband John Dunne.
The beef industry, for example, has seen huge fluctuations in price.
While Fidel’s manages to keep its costs down by ordering larger cuts of meat, she said it was reaching the point now where chicken and beef were starting to be viewed as “luxury items.”
She added that the increasing prices were likely to continue for the next 18 months, impacting restaurants and grocery stores across the island.
She added, “I think you’ll see a shift to plant-based alternatives in the fast food and diner industry, now that there is more trust in brands like ‘Beyond Meat’ and ‘Impossible’ burgers. It’s a logical leap that I think the market will be pretty accepting of.”
Luciano De Riso, manager of Grand Old House and the Wharf restaurants, said the rise in prices has compounded the larger problem that venues have faced since COVID – no customers.
He said the restaurants would have to cope with whatever cost increases came in terms of ingredients because it was not in a position to raise menu prices at a time when there are no tourists on island.
Further increases in the pipeline
It seems likely that further increases are on the way.
A raw materials shortage that has been impacting the construction sector for some time is starting to bleed over into the food industry.
Gina Peck, of Progressive Distributors, which imports food and other necessities from all over the world to Cayman, said the company had been notified by many of its suppliers of impending price hikes.
She said this was impacting everything from toilet paper and feminine hygiene products to canned foods and beef.
“At the moment we are doing everything we can to absorb those costs as much as possible and not pass it on to the end consumer… but our margins are very small.”
Peter Dutton, managing director of Jacques Scott, said the cost and high demand for shipping was a further concern. The distributor brings wines and beers from as far afield as Australia to Cayman. But a global shortage of refrigerated containers as well as rate hikes for moving product is adding to the cost. In some cases, he said, this is offset by long-term contracted rates. In other cases, the business is swallowing the cost to keep consumer prices down.
“Our base product prices are relatively stable so we have been able to absorb shipping price increases for now in the hope the market will sort itself out,” he said.
Inflation a global problem
The picture of rising food prices is reflected across the world, though island communities like Cayman that rely heavily on imports are likely to be more severely impacted.
The root cause of many of the issues is linked to the inability of manufacturers to resume operations post COVID at a pace that can keep up with demand.
“Over the last six weeks, we have seen the market come roaring back faster than anybody would have anticipated,” said Mark Allen, chief executive of the International Foodservice Distributors Association, according to a Wall Street Journal report. “The start up has been, in many ways, as difficult as the shutdown…Everybody is trying to turn it on immediately and the capacity might not be there.”
Bloomberg reported earlier this month that global food prices had hit their highest mark in almost a decade. Drought in South America and record purchase orders from China are exacerbating the problems, the news agency reported.
“We have very little room for any production shock. We have very little room for any unexpected surge in demand in any country,” Abdolreza Abbassian, senior economist at the UN’s Food and Agriculture Organization, told Bloomberg.
“Any of those things could push prices up further than they are now, and then we could start getting worried.”