Brace for higher food prices next year

Antigua and Barbuda is among Caribbean countries told to brace for prolonged effects of external economic shocks in 2023, including high food and fuel prices and rising international interest rates.

That stark warning is coming from the Inter-American Development Bank (IDB).

The IDB is also warning that higher interest rates could lead to economic slowdowns, or even recessions, in important source markets for exported services and goods from the Caribbean. 

The impact of these shocks according to the IDB depends on the trade structure of individual countries, as well as the external financing requirements of each country.

“Although domestic inflation has been somewhat less severe in Caribbean countries, rising prices diminish real incomes for households and increase business costs for firms,” the report said, noting that online surveys from the World Food Programme also suggest a sharp rise in food insecurity across the Caribbean. 

The annual inflation rate climbed to an average of eight per cent by mid-summer in the Caribbean countries covered in the report, excluding Suriname, which has been coping with high inflation since the fall of 2020. 

Regional economic advisor for the IDB’s Caribbean Department David Rosenblatt expressed hope however that the “unfortunate external conditions will improve during 2023”. 

“As with natural disasters, however, it is always prudent to prepare for the worst, even as we hope for the best,” he said.