inflation: Private sector avoided a Greater iMPact

Private sector forced to make adjustments

Retailers had to obtain alternate sources to effectively deal with delays in the supply chain

Ileanexis Vera Rosado ivera@elvocero.com @iverarosado

In fact,

If consumers feel that their finances are running out and that money is barely enough to pay for necessities, it is because the impact of inflation has been registered in different economic sectors.

The food sector, for example, has experienced the greatest cost increases and is the one sector that reflects the most in people’s daily purchases.

However, Manuel Reyes, Executive Vice President of the Chamber of Food Marketing, Industry and Distribution (MIDA, for its Spanish acronym), assured the sector has made significant adjustments to prevent increases in the cost of food products. He argues these adjustments have allowed food inflation to be lower in Puerto Rico than in the United States.

Reyes also pointed out that they have been more efficient in obtaining alternate sources of supplies to effectively deal with delays in the supply chain.

“This has allowed us to have fewer empty shelves and lower prices than in the United States,” he said.

Reyes said that for some time now MIDA has been asking the

Department of Labor to integrate the island’s Consumer Price Index to that of the United States, and to publish the prices of all articles, not only the variation as it is done today.

“That way, if the local index is under the same system as in the United States, we will be able to directly compare prices. Today, that cannot be done,” he said.

The Housing Situation

Another segment of the economy that has registered strong inflation is the housing rental sector. According to Rosita Alicea, president of Landlords Association, rental prices have increased between 10 and 20 percent, depending on the location. According to Alicea, who is also a real estate broker, in the San Juan The housing shortage has Metropolitan Area rentals does not go below $750 boosted the value of the per month. She considers the increase in rent to units. But it is very difficult to be a consequence not determine to what extent, since only of inflation, but also of the transformation of it depends on their location. – Pedro Torres President, Puerto Rico Mortgage apartments and rental housing into Airbnb, which further reduces the existing rent inventory. Bankers Association Regarding properties for sale, Mortgage Bankers Association president Pedro ‘Peter’ Torres, acknowledged that areas such as Isla Verde, Dorado, Palmas del Mar, Old San Juan, Rincón and housing complexes in Santurce, such as Ciudadela, have registered a significant rise in value. But he explained there is no official data on the average increase in sale prices, which may respond to other factors. “The housing shortage has boosted the value of the units. But it is very difficult to determine to what Difficulties caused by the COVID-19 pandemic in the production and distribution of vehicles have caused the value of used cars to also increase, and they are no longer an affordable option for buyers.

extent, since it depends on their location,” Torres argued.

The Auto Industry

In the automobile sector, industry representatives admit prices have increased, although the prevailing low-interest rate in the market –which is between 3.99% and 4.95%– has allowed them to work around the situation.

José Ordeix, president of the United Automobile Importers Group (GUIA, for its Spanish acronym), attributed the inflationary impact to the shortage of new units.

“We have managed to keep the sector up thanks to the distributors’ efforts to offer a respite to consumers [who need to buy a new car],” Ordeix said. The difficulties caused by the COVID-19 pandemic in the production and distribution of vehicles have caused the value of used cars to also increase, and they are no longer an affordable option for buyers.

“Used cars have appreciated, contrary to what was the norm –that a car leaving the dealership has already depreciated. This reflects the high demand for cars right now,” said economist Adrián Alós.

According to Alós, part of the acceleration of inflation also responds to the fear of people and businesses of running out of products, or that they will become even more expensive, so they have decided to buy more than they need, which reduces the supply.