The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A BAHAMIAN food store owner yesterday said “there goes the business” as he voiced fears that the price control regime’s expansion will drive smaller operators such as himself out of business.

Atwell Ferguson, Golden Gates Supermarket’s general manager, told Tribune Business that some of the extra 38 items set for inclusion in the price control regime from Monday, October 17, are “the only things that were helping the businesses to survive”

“Way back in 1972 they went up by 23 percent,” he added of price-controlled mark-ups, “and then all types of taxes increased from 1997 to now. Even the Bahamas Power and Light (BPL) rate has been increased. I just don’t know how the business is going to make it.”

While there was nothing wrong with the Government’s efforts to make groceries more affordable for Bahamians, Mr Ferguson argued that the effort “should be from the top down and not from the bottom up”. He added: “The government should be the first persons to start to reduce taxes, but instead they increase taxes and it comes down to us to pay it.

“This will hurt us and I don’t understand it. There is global inflation and I understand that. But the Government is not doing anything to help the businesses, yet they want the businesses to help the people and then they take all of the credit.”

Philip Davis KC, in his national address on Tuesday evening, unveiled a major expansion of the price control regime to 38 extra foods, medicines and other essentials in a bid to combat soaring inflation that has “made life even more unaffordable” for many Bahamians.

He pledged that the Government is doing more to tackle the country’s cost of living “crisis” while acknowledging that prices have risen “across the board faster than they have for many decades”. Emphasising that the price control regime’s expansion is for a six-month trial period, he told Bahamians: “Tonight, I want to announce that we have added 38 new items to be subject to price controls in our country.

“We are limiting the wholesale and retail mark-up of everyday items like diapers, and food like chicken, eggs, bread, bananas, apples, oranges, broccoli, onions and potatoes. These items are being added for at least a six-month period, at which point we will review and evaluate the impact on businesses and consumers.

“We are also reducing the profit margin on price-controlled drugs, providing additional relief to Bahamians. During an inflation emergency it’s important to take the steps we can to improve affordability.” The price control regime’s expansion, which also involves an increase in the number of inspectors, is designed to work in tandem with the minimum wage increase to help further offset inflation’s impact on vulnerable, low income Bahamians.

Price controls have always been a controversial instrument among the private sector - especially those companies and businesses impacted by them. They were imposed by the Government decades ago to prevent what it viewed as an unscrupulous merchant class from exploiting lower income Bahamians by unreasonably hiking the price of food staples and other essential products, thus placing them out of reach while undermining living standards.

However, opponents argue they are an anachronism that have no place in a modern 21st century economy. The private sector views price controls as an inefficient, distortionary mechanism that creates more unintended consequences than the supposed problems they solve. They can result in product shortages, while retailers and wholesalers have to increase prices and margins on non-price controlled items to compensate for selling these goods as effective “loss leaders”.

Andrew Higgs, general manager of WHIM Automotive, said he does not believe in price controls and hit out at a “farce” that governments make consumers believe they are looking out for them through using them. “They just don’t work,” he added.