Chambers warns of higher inflation as fuel is expected to rise | Local company

With the cost of living steadily rising, now was not the time to adjust fuel prices, according to an economist and some business groups.

Finance Minister Colm Imbert announced yesterday in Parliament that premium gasoline will increase by $1 a liter to $6.75; super gasoline will increase by $1, from $4.97 per liter to $5.97; the price of diesel will increase by 50 cents to $3.91 per liter and the price of kerosene has been increased to $3.50.

Economist Dr Vaalmikki Arjoon, responding to Imbert’s announcement, said the increase in fuel prices at the pump at this stage is very premature and shows that policymakers are utterly unaware of the difficulties facing the business world. and households as a whole are still facing because of the pandemic.

“They should have at least waited until the end of the fiscal year to assess our true fiscal position and private sector financial stress levels before making such a decision.”

According to Arjoon, the purpose of the fuel subsidy when it was introduced was for citizens to benefit from their ownership of T&T oil.

He noted that it was essential for the state to apply hedging strategies in the energy sector in recent years.

“By using hedging instruments, we could have locked in lower fuel prices in the international market when prices were low in 2020 and earlier in 2021, allowing us to purchase fuel at a previously agreed lower price. Therefore, prices at the pump would have been offset by the benefits of hedging allowing the consumer to benefit from not having to pay more at the pump,” Arjoon added.

PDA: Price set by

the international market

However, Petroleum Dealers Association (PDA) President Robin Narayansingh said the price of fuel is not set by the government, as it is set by the international market.

He explained that a price increase was certainly not surprising, as the fuel subsidy was not sustainable for the government to continue funding.

“Three billion dollars a year is spent on grants, this money could be used for productive purposes, such as repairing roads, improving hospital facilities and investing more money in the Heritage Fund and stabilization (HSF),” Narayansingh said.

domino effect

Greater San Fernando Area Chamber of Commerce President Kiran Singh said with the company still trying to get back to pre-pandemic levels, the country can expect to see higher costs for delivery. immediate short-term goods.

“The traveling public will have to pay more to get to their destination, which of course will leave them with less disposable income and less savings potential for future endeavours. Clearly the government is in a precarious position when it comes to funding the country’s economic future. The Chamber is of the view that we need to rely on net foreign exchange generators to support the economy,” Singh said.

He further added that the public and private sectors must now work collectively to generate increased production in the agriculture and livestock sectors.

“A reasonable compromise”

The Trinidad and Tobago Chamber of Commerce and Industry pointed out that by raising the prices of gasoline, kerosene and diesel, the government was passing on 50% of what would have been the required subsidy to the consumer, which is a reasonable compromise under the circumstances.

“The government left subsidies for cooking gas in place. This measure will mitigate the increase in the cost of living, which would be inevitable in the face of rising fuel prices.

In addition, the Chamber observed that the government will remove taxes and duties on new and used hybrid motor vehicles.

“This measure will ultimately reduce fuel consumption by 1 billion liters per year and, of course, reduce fuel subsidy expenditures in due course.”

The business group hopes that once the Russian-Ukrainian conflict is resolved and fuel prices return to previously budgeted levels, the government will review subsidies and readjust fuel prices.

“This would be extremely important, as increases in the cost of living will reduce disposable incomes and vulnerable people in society will be exposed,” the Chamber added.

Inflationary effect

The Confederation of Regional Chambers of Commerce (CRBC) has said that while it understands the reason for the increase, it believes that the increase in fuel prices will only serve to deal a very negative blow to the public and businesses. .

“Such a development does not seem well thought out due to the impending aftermath of this appalling policy. Prices for transportation, travel, goods, services and pharmaceuticals will rise astronomically, putting pressure especially on working class and single-income households,” the Chamber lamented.

The Chamber recommends that the government immediately consider fiscal stimulus in shaping its policy for the eventual growth and sustainability of the business sector, in particular small and medium-sized enterprises (SMEs), and to help alleviate the difficulties already experienced by the working class.

He added that rising fuel prices will only contribute to inflationary pressures for the time being.

Melissa Senhouse, president of the Greater Tunapuna Chamber of Commerce, said the increase in fuel prices will have an inflationary effect as businesses could ill afford to absorb any further increases in spending.

“Companies must rise to the challenge and seek efficiencies and shared logistics solutions to survive,” Senhouse added.