Walking through a Chaguanas supermarket, carefully looking at price tags on basic items, Marissa Lochan has become a selective consumer. In the weeks since Government has implemented the new Value Added Tax (VAT) regime, lowering VAT to 12.5 per cent and decreasing the number of zero-rated items, Lochan has had to make changes to her grocery list she had not considered before.
Instead of buying a case of Kool Kids drink for her six-year-old daughter to use during the school week, she buys cans of concentrated juice and makes for the week. Items which she regularly bought, yogurt and chocolate milk for her children, are things of the past. Yesterday, the Ministry of Trade and Industry released a list of food prices, before and after February 1, the day the new VAT regime was implemented.
The information from the list showed items which had increased by as much as 21 per cent in a matter of months. While a few items, such as Brunswick Vienna sausage and Cooks Mate soya chunks actually decreased in supermarkets, almost all other items, even those which should have decreased by 2.5 per cent, showed increases.
Nestle’s Orchard orange drink increased by 17.05 per cent, Eve soya oil increased by 21.44 per cent, Chief table salt increased by 20.07 per cent and Breeze multi-active soap powder increased by 17.4 per cent. Attempts to contact distributors of these products were not successful.
In its newspaper advertisement the Consumer Affairs Division noted some prices may have been altered between the division’s survey period and the introduction of the new VAT regime. In a newspaper interview Finance Minister Colm Imbert said the Government had no control over the base rate given by distributors.
President of the Supermarkets Association, Yunus Ibrahim, in an interview yesterday said in the past few months there had been a consistent increase in the base price due to increases from the suppliers.
“The reason for the variation in increases is that since it was announced in the budget in September that this measure was going to happen by December, the supermarkets would have been met with price increases by the supplier,” he added.
Ibrahim said between November and January 31, the volley of increases from suppliers would account for most of the increases. He said suppliers sometimes cited international market rates for the increases. For the past few months, the reason given by suppliers for increases has been the scarcity of the US dollar.
Ibrahim said in some cases, suppliers were forced to approach black market pricing of the dollar which currently stood at a value of $7. In other cases, suppliers were buying from a third party distributor who placed markups on the goods. “This is the core of our current pricing issues. There needs to be a prioritisation and stabilisation of US rates or things would continue moving in that direction.
“This trend will continue until we control the US availability and prioritise it for the purchase of food,” Ibrahim said. In a post-Cabinet press conference last month Imbert said that despite the removal of some items from the zero-rated list, citizens were set to save money due to other taxation measures.
These measures included the across the board reduction of VAT from 15 per cent to 12.5 per cent and the increase in personal income tax allowance from $5,000 to $6,000 monthly. With prices increasing on grocery shelves, consumers say they are feeling the pinch. Dimples Bhagan, a Chaguanas mother of two, says she has made a switch from the brands she purchases.
“I try to buy generic products where I can because over the past few months my overall bill has increased by more than $100.” Bhagan said the situation had forced her to make changes. “I’m not purchasing a full grocery list. I come every two weeks and buy what I need and I try to buy the cheaper versions of things because it is really hard,” she said.