Dear Editor,
The President’s observation that Guyanese are increasingly shopping at supermarkets and dining outside is not incorrect. But treating this behavioural shift as an explanation for inflation reveals a profound misunderstanding of what this shift represents and what it demands from policymakers.
What the President has observed is Engel’s Law: as household income rises, the proportion spent on food falls while spending on services rises. A family earning more does not spend proportionally more on groceries — it spends more on dining, quality goods, and services. This is not wasteful behaviour; it is the universal pattern of consumption as prosperity increases. When Guyanese shift toward supermarkets and restaurants, they demonstrate that oil wealth is raising household incomes. This is precisely what should happen.
But here is the critical error: the President has attributed inflation to the very sign of rising incomes. Economic theory teaches us that services have high income elasticity — demand grows sharply as incomes rise. When incomes increase but productive capacity in services does not keep pace, prices spike. A family earning thirty percent more should live thirty percent better. Instead, inflation erases those gains. This is not a consumption problem; it is a macroeconomic policy failure. The President should be managing currency stability, investing in service-sector capacity, and anchoring inflation expectations to protect income gains from erosion. Instead, he is blaming citizens for shopping differently when rising incomes require them to shop differently.
The behavioural shift the President identified proves that oil wealth is reaching households. What it should demand from leadership is sophisticated policy—not dismissal of citizens’ economic choices. We expect a President who understands not only what is happening in the economy but why it is happening and what policy architecture is required to ensure that rising incomes translate into genuine improvements in living standards rather than hollow gains consumed by inflation.
Yours sincerely,
Keith Bernard
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