By Petulia Clarke, Staff ReporterTHE WIDENING of the General Consumption Tax (GCT) net has led to merchants and consumers fighting an uphill battle for survival.
The mandatory higher prices have resulted in losses, with consumers cutting back and merchants complaining of lower customer turnouts.
Some consumers report that they are either opting for cheaper essential items or have foregone supermarkets for wholesale shopping. Merchants have admitted to absorbing a larger part of the total cost, and some businesses are expected to fold unless they increase their prices further.
Clarence Chin, vice-president of the Bakers Association of Jamaica and proprietor of the Golden Crust Bakery in Ocho Rios, said the GCT imposed on raw material and the sliding dollar which hit a new low at $60 to US$1 on Friday, will hit ba-kers hard.
"Unless there's some more increase in prices some bakers will disappear," he said.
GCT ON BREAD PACKAGING
The prices of bread and other baked products went up just this March, an increase bakers attributed to rising raw materials, fuel and utility costs. At that time, there was a seven per cent increase in the price of flour, resulting in bakers hiking their prices by as much as eight per cent. Bread was being sold for as much as $65 per two-pound loaf.
"But while bread is exempt (from GCT) and any raw material used in bread-making, GCT is now applied to the packaging and items like wrapping for the bread is now taxable," Mr. Chin explained.
A fact agreed to by a supervisor at the Captain's Bakery, Half-Way Tree Road, who said that the bakery recently hiked bread prices because it had no choice.
"The raw material people said they have to pay cess and while we didn't usually pay GCT on the bread bag, we just had to start," she said. The devalued dollar was also a factor.
And consumers have had to be finding novel ways to match their usual salaries to the increase in food and other prices.
STRETCHING THE LAST DOLLAR
Practical nurse Gloria Williamson, who was spotted inside the Lenn Happ Supermarket, Constant Spring Road, said she tried to buy the things that are necessary and more nutritious for her children and grandchildren.
"I have replaced condensed milk with Lasco Whole Milk, which is just as good and cheaper," she said. "I try to stretch the money to get the best. Things like soft drinks are too expensive so I leave that. And I give them lots of soup as the ingredients are cheaper."
SIGNIFICANT INCREASES
Michael Rhone, a truck driver with three children, agrees. He said the first hit to his pocket was when he had to buy a can of Nestum (infant formula) recently and realised that the price had increased by more than $30 in the last two weeks. He also said his daughter just recently had to get a prescription skin cream, the cost being more than $3,000 at the pharmacy, blowing the amount on his health card.
"The GCT alone brought it up that high," he said. "I've had no salary hike but the bills eating away at my pockets even more. I realise that my bills are higher and I'm saving less, it's appalling."
Others, like mother of two, Denise Coates, have had to cut back on personal luxuries in order to ensure that her two children get the best.
"For the kids I have to buy the best, but I have to buy the cheaper stuff for myself," she admitted.
BUYERS CUTTING BACK
Paul Nash, former Jamaica champion swimmer who was also spotted inside Lenn Happ, said that although he only visits Jamaica occasionally (he lives in Australia), he has already noticed the difference in prices.
"Everybody is saying it's just horrific," he said.
Robert Young, a computer analyst who installs point of sale systems in supermarkets and wholesales, said that most of these businesses were expecting consumers to cut back as prices increase.
"Lots (of them) are reducing the percentage of mark-ups on items to maintain customers," he said.
But Timothy Lym, manager at Brooklyn Supermarket, Half-Way Tree, said supermarkets won't be able to do this for much longer.
"The thing about a competitive market is that everybody will be the last man to raise his price," Mr. Lym said. "Those who are larger will try to hold out as long as possible and we're all trying to absorb as much as possible but we cant do it for much longer."
