How does the dollar’s slide affect consumers?

Teri Ann Renee Paisley, Gleaner Online Writer

Once upon a time not so long ago, five Jamaican dollars could buy one American dollar.

Of course, American dollars were not in an abundant supply but the possibility existed that if you could find them then you could buy it at that exchange rate.
Years have passed and it’s now the year 2013 and the exchange rate as of July 3, is $101.40 to one American dollar.

So how has the dollar’s slide affected consumers?

The most obvious impact of the dollar’s slide is that manufacturers across the island will pass on the increased costs to their customers. Jamaica imports a lot of raw material as well as brands from various countries including the United States.

These imports will now cost manufacturers more money in order to clear customs. Any business that uses foreign exchange will also have to increase their overhead costs.

Buying Jamaican!

The only good thing I can see that could come from this development is that this could be the incentive we need to purchase more locally made products. There could even be a renewed push to start supplying some of the raw materials needed for manufacturers in local factories and this could be encouraged with more financial backing from the private sector.

The Minister of Finance, Dr Peter Phillips made this assertion in an article in The Gleaner dated June 21, 2013, “In the long run, what you have to do is incentivise a process whereby you are going to substitute yam and cassava and local corn and we are already beginning to see some adjustments take place. But the adjustment is not instantaneous but the price movement is instantaneous … . The pain is instant but the gain is future prospects.”

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I believe that this could also stimulate the agriculture sector as our young people are often unemployed and there are acres of land available for them to cultivate crops so as to lessen the need to import foreign goods.

I think that all Jamaicans now have the opportunity to take a long thorough look at their spending habits.

The foreign brands that we feel compelled to buy are often no better than their local counterparts.

If these foreign brands increase in price then we will be forced to consider how to adjust our budget accordingly in order to accommodate higher prices or replace them with local products.

So how do you think the exchange rate will affect Jamaican consumers?

Tags: devaluation, prices