The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Food retailers “don’t feel too good” that the Government could reintroduce an expanded price control regime in the future as they yesterday questioned the extent of the initiative’s success.

Philip Beneby, president of the Retail Grocers Association (RGA), which represents more than 130 food store operators, told Tribune Business he is unsure how the Government could measure or benchmark the revised regime’s impact after Michael Halkitis, minister for economic affairs, earlier this week hailed the six-month initiative - which expired on April 24 - as a “success” in providing some relief to consumers from inflation and the high cost of living.

“I don’t know how exactly they would measure success, but there were a bit of savings for the customers,” Mr Beneby said. “This is during a time of high inflation, which we had no control over. So in that regard you can view it as a success.”

Food merchants are “coping” with the return to the pre-November 2022 price control regime despite Mr Halkitis saying the Government is leaving open the option to expand it again in the future. Mr Beneby warned: “That’s their prerogative and we don’t feel too good about that. But like the Government had said, they would continue to monitor and see if it needs to happen if I understand them correctly.”

Price Control officials previously said that while larger food retailers were compliant with the expanded price control list, many smaller ‘Mom and Pop’ operations found the changes difficult to implement and were cited on many occasions for breaches. Mr Halkitis, though, said the expanded price control regime had bought the Government time to increase the number of price control inspectors who will be in the field ensuring compliance by merchants.

Mr Beneby added: “They are not saying that for sure they would reinstitute the expanded price control list, but they will continue to monitor it and see if it needs to happen again, considering inflation, which we have no control over. Right now our members are not saying anything about the expiration of the expanded price control list. We will continue to monitor this and keep the public appraised on what takes place.”

The Association president said the success of the expanded price control regime depends on which side of the debate persons sit. He added that it is “difficult to contradict” what Mr Halkitis said given that he sits in a ministerial chair.

Food merchants and their wholesale suppliers last year warned that the 38 selected categories for expanded price controls included more than 5,000 product line items, and would lead to between 40-60 percent of a retailer’s inventory becoming price controlled with mark-ups below their cost of sales.

This would result in a large portion, or the majority, of their inventory being sold at a loss. Besides threatening hundreds of industry jobs, and the very survival of many operators, the Retail Grocers Association and its members also warned that the original proposal could result in food shortages as retailers/wholesalers decline to stock loss-making items while also increasing prices on non-controlled items, thereby further fuelling the cost of living crisis.

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”.

In practice, Tribune Business understands that while the Government gazzetted the expanded price control regime last year, it has not been enforcing it and the food retail and wholesale industry have continued to operate under the margins and mark-ups existed prior to its October 2022 unveiling.