The financial strain that many in the Cayman Islands felt after having faced record inflation in 2022 did not relent in 2023 as interest rates and the cost of living continued to trend upwards adding to an already difficult economic climate.
This meant that Christmas dinner this year cost more than in previous years, as many sought to keep pace with inflation and maintain the tradition yuletide festivities.
Fuel prices, inflation rises
The first quarter of the year saw massive hikes in the cost of food, drink, household items and utilities pushing consumer prices 6.6% more than it was during the same period in 2022.
The island saw a 37.1% rise in water supply costs and 22.7% rise in electricity price in the first quarter.
This followed on from a near 30% jump in fuels and lubricant prices in 2022 which drove Cayman’s inflation to record levels that year, cumulative stats for which were released late 2023.
Caribbean Utilities Company customers also saw an increase in the base rate of their electricity charges on their bills in February. The rate increase had been deferred from June 2022.
Mortgage strain
Homeowners struggled to keep up with interest rates as consecutive increases saw monthly mortgage repayments double in some cases.
The average interest rates on mortgages increased from around 4% to up to 9% in the space of two years.
Former Premier Wayne Panton appealled to Cayman’s bankers to slow down increases in interest rates, but his plea on behalf on consumers was rejected.
In a statement issued in May, Panton said he had asked the local retail banks to delay implementing interest rate hikes in tandem with rate increases by the US Federal Reserve, which sets the prime interest rates for borrowing.
He also requested banks give borrowers 60 days’ notice before increasing rates following Fed hikes, but said “the banks have once again collectively refused to consider this simple mitigation measure”.
Lawmakers, unhappy with the bankers’ response, voted overwhelmingly in June for government to continue discussions with local banks for interest rates to be cut, and pause further increases.
West Bay West MP McKeeva Bush brought the issue of high bank rates to Parliament through a private member’s motion, which 16 MPs supported.
He called for “action” on the rising interest rates as many Caymanians were facing the prospect of foreclosure if nothing was done.
Cayman banks later agreed, in June, to give a minimum of 30 days notice before passing on any new interest-rate hikes to customers over the next 12 months.
It came as the Fed announced it was pausing its relentless campaign of rate hikes.
Salaries stagnant
As prices soared, employee wages remained stagnant amid the rising cost of living.
A formal review of the existing minimum wage, which stands at $6 per hour, commenced in earnest this year under former deputy premier Chris Saunders.
The Cayman Compass tackled the plight of minimum wage workers in a special investigative series as the review progressed.
Review committee chairman Lemuel Hurlston pointed out that Cayman’s $6-an-hour minimum pay is below a “starvation wage” and it needs to be changed.
The review has since been completed and is with the government for decision; however, Labour Minister Dwayne Seymour does not appear to share the same zeal to move the needle forward on the issue.
Speaking during the budget debate in December, Seymour, a businessman, appears not to be in a hurry to raise Cayman’s $6-an-hour minimum wage, despite a year-long review process and a massive national consultation.
He noted that “only 23%” of those earning minimum wage are Caymanian, while 77% were “transient” workers.
He proposed a further review of the minimum wage was needed to prevent any “mistake” being made and avoid increasing the burden on Caymanians.
However, former Labour Minister Chris Saunders countered this as he called on government to take the necessary steps to bring the Cayman Islands up to international standards when it comes to workers’ benefits and wages.
Saunders urged that efforts to improve the lives of workers continue, insisting it was not right that some employees were “being treated very, very poorly and not being paid a proper wage”.
The issue is expected to be tackled in the new year.
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