Dionne Rose, Business Reporter

Cornershops sold rice at $10 above the subsidised price. - FILE

The government's $500 million subsidy programme that was meant to cap prices on basic food items for three months was ignored by most retailers, a survey by the Consumer Affairs Commission (CAC) has found.

But the agency says the programme was somewhat effective, having served to stabilise prices at grocery shops.

The CAC survey covered more than 220 grocery operations - split among 'corner-shops' and larger supermarkets.

Government had initiated the subsidy or 'price support' programme to reign in runaway food prices that sent January inflation climbing 2.2 per cent and yearly inflation to 18 per cent.

The subsidy was pulled Monday.

Dolsie Allen, CAC chief executive officer, told Wednesday Business that of the 166 corner- shops surveyed islandwide over the three months, compliance ranged between 21 and 58 per cent.

No significant increases

"There are different ways of assessing whether or not this programme has been successful," said Allen. "What we found in many instances, they (shops) really did not adhere to the recommended prices but ... there were no significant increases in the price overall."

The results were better among the 58 supermarkets surveyed, said Allen, but key to the programme were the cornerstores where 80 per cent of consumers shop, as determined by the survey.

Industry Minister Karl Samuda said extending the subsidy programme could be costly. Maintaining flour prices could cost $2 billion. - File

Allen said that without the subsidy, prices for basic food items would likely have escalated by 20 to 30 per cent.

She said there was a general good compliance rate among the 58 supermarkets surveyed islandwide. She however noted that the survey showed that 80 per cent of consumers shopped at these corner shops.

The government had provided subsidies on items such as rice, counter flour, bread, crackers cooking oil and powdered milk.

Rice for example, was to have been sold at $55 per kilogram.

But the CAC's tracking system, in the second week of March, found that the average price of rice at corner shops was $65.39 per kilogram, while the supermarket price was $58.56 per kilogram.

Meanwhile, the corner shops sold counter flour at an average price of $63.27/kg, well above the recommended $60/kg, while supermarkets retailed the product at $59.50/kg.

Hardough bread was sold at an average price of $140 at corner shops, and $138.32 at supermarkets.

The recommended price was $138 to $140.

The conditions that have spiked prices have not abated - world oil and grain prices continue to escalate while local agriculture remains in recovery mode.

But government has not said whether it will reinstitute the subsidy.

"I would not rule it out," Industry and Commerce Minister Karl Samuda said in an earlier interview with Wednesday Business.

"But as you know, it is very challenging because it is very costly."

To maintain price of flour throughout the year, he said, the government would have to spend $2 billion to allow bread to be sold at an average price of $135 per loaf.

dionne.rose@gleanerjm.com