Submitted by John A
We have heard the word inflation being bandied about a lot recently, but what does it really mean to the average Barbadian in real terms?
I sent BU a menu which was posted on the the 4.4% growth NTSH blog – see menu. This showed what a popular beach restaurant in St Michael was charging for their offerings in 1975. At this time there is no clearer example of inflation I can think of than what this menu brings to light. The question then when we look at this menu and compare it to today’s prices, has to be, are we better off today than in 1975? As numbers don’t lie let us now turn to them and compare 1975 to now. In other words has our personal GDP kept pace with inflation over the period or are we poorer in real terms?
- Coke large 25 cents 1975 cost $2.75 in 2023, 11 times more
- Salad large $1.50 in 1975 cost $15.00 in 2023, 10 times more
- Steak & chips $4.75 in 1975 cost 38.00 in 2023, 8 times more
- Ice cream lg 40 cents in 1975 cost $9.00 in 2023, 20 times more
- Cheese burger 75 cents in 1975 cost $9.00 in 2023, 12 times more
So the average factor of increase over 48 years on the above is 12.2 times higher prices.
One must now ask what has salaries increased by over the last 48 years? Well we know for 10 years under Sinkyuh we had a wage freeze, let’s subtract them and ask over 38 years instead.
If you were paid $1000.00 in 1975 and you got an increase of 4% over the 38 year period (48- lost decade), you would be earning $4560 dollars today. Now I don’t know how many got a 4% raise every year for 38 years but let’s be kind. This then gives us a wage increase factor for the period of 4.56 times.
In summary eating out increased by a factor of 12.2, but salaries only grew by a 4.56 factor over the same period. Now if we even take the 10 Sinkyuh years and assume a 4% increase in pay every year for them as well, the factor for earnings would still only be 6.79 times.
Now the OECD has forecasted globally an increase in GDP of 2.7% with a rate of inflation of 2.6%. This would mean you will not be poorer in real terms, at least not for 2024 if their predictions are correct. I have also included for you a survey of GDP done by Global Finance for the period 2018 to 2022, which is worth a read as Barbados is included and it covers the pre-Covid and post-Covid economy.
Finally take a read of the article by the ILO titled “Rising inflation brings fall in real wages.” Next time you wonder why you working for more but still always “ brek”, just remember the 40 cent ice cream from 1975!