WILLEMSTAD - The sharp rise in fuel prices in April will have a major impact on the restaurant sector. The Curaçao Restaurant Association (CRA) expects its members to find it difficult to process these price increases. Restaurants on Curaçao are already experienced as expensive. Passing on the higher rates can have a negative effect on clientele.
Recently, propane gas, electricity, gasoline, and diesel prices have nearly tripled and not just for consumers. In addition, purchasing costs are rising faster and faster due to a shortage of raw materials. There is also a shortage of staff and business owners must use higher salaries to attract staff. All this while most hospitality business owners face major cash flow problems, there is little money to invest and there is insufficient turnover to make up for arrears from both suppliers and taxes incurred during the pandemic, the CRA said in a press release.
For consumers, too, life is becoming more expensive across the board. Grocery shopping is up nearly fourteen percent in two years, while the average cost of living is up 3.8 percent from last year. Potatoes, vegetables, and fruit have risen sharply in price, almost thirty percent compared to 2019. But fats and oils also became more expensive, almost twenty percent in a year and meat and fish by more than ten percent in a year.
Curaçao will also become more and more expensive for the tourist. In addition, KLM and TUI have already announced that ticket prices will become more expensive, which will certainly affect tourism from Europe, says CRA.
The CRA believes that the government must act quickly now to absorb these price increases, if only temporarily. "It is possible to look at lowering excise duties, eliminating a link in sales tax, and lowering import duties. This allows you to maintain the current purchasing power, which is already low, and the population can still afford the minimum. The sector can then prevent price increases."
Inflation expectations
Disruptions in international trade and the war in Ukraine are causing rising energy, food and commodity prices. The contribution of energy prices to the increase in the general price level will therefore be higher in the coming period than previously thought and will only approach zero further into the future. "Ukraine and Russia are important exporters of various agricultural products and we are counting on higher prices for oilseeds and grain. For example, bakers and margarine and sauce producers will notice this in their profit and loss accounts in the short term. In addition, Ukraine is an important producer of feed maize and Russia of ammonia and other basic components of fertilizer. A price increase of these input costs for arable farming and animal husbandry can eventually lead to more price increases further down the chain."