Causes of inflation in Trinidad and Tobago
Inflation in Trinidad and Tobago is caused by a few factors that can affect the country severely. Inflation results in the increase in prices on the most basic commodities (food, water etc.) and that can bring about many problems for the average family. One such cause is the instability of the economy. Because of the economic crisis of 2009, prices all over the world are increasing. In Trinidad and Tobago, that has an adverse effect on consumer goods prices because Trinidad and Tobago is a Third World country i.e. Trinidad and Tobago is dependent on other countries for goods. This means that whenever an item is exported to Trinidad and Tobago, Trinidad and Tobago's government must pay import tax and duties on the imported goods and they must pay for the goods itself. And if the prices on the goods are already high before import, then imagine how much it will cost after taxes and duties have been added to it. The government and private companies will have to pay the price of the goods and the only way for them to make any kind of profit is by raising the price even further. Then the citizens will have to pay the increased price plus a value added tax (VAT) of 15%. That alone can force many people into bankruptcy and poverty. Another cause of inflation in Trinidad and Tobago is global warming. In the efforts to thwart global warming, many countries have switched to fuel-efficient vehicles and battery-operated vehicles. This has resulted in a lowered demand for oil and Trinidad and Tobago's main source of revenue is oil. Fewer countries need oil-based fuel and therefore, oil exports have dropped. The government receives less revenue from exports because of the low demand for oil and that forces the government and private companies to raise the prices on some goods to compensate for the loss.
Another cause is migration. Whenever people leave Trinidad and Tobago, its population is reduced. This means that basically, the government has fewer people to tax and private companies make less profit. That causes the government and the private companies to increase the prices on their goods and services to compensate for the loss. One final cause is Demand for Increased Wages. Workers and labourers seek raises in their pay so that they can take care of their family or just go on vacation. The truth is, if a private company increases the pay of all its workers, then it will incur loss if it continues to sell their goods for the same price and pay its workers more. The only way for the company to make a profit without making its workers unhappy is by raising the prices of its goods to make a profit. That contributes to inflation.