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What Is the Impact of Inflation on the Standard of Living Among Low Income Jamaican Citizens in the Last Decade?

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  • November 2012
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Background

According to Oglesby (2007), inflation is the rise in price of goods and services. In any country inflation reduces the spending power of the citizens. For the period 2002-2011 inflation in Jamaica average 11.24%, (Statistical Institute of Jamaica STATIN, 2011). Standard of living in Jamaica has been on the decline over the past decade as this can be associated with the increase in inflation, (BoJ - Statistical Digest 2005). This for the most part have affected low income earners specifically those earning minimum wage or less, for example, unskilled workers, domestic workers, and store clerks. It has become extremely difficult for individuals to provide the basic necessities for their families much less to afford entertainment. The average increase in minimum wages move from one thousand eight hundred dollars ($1800) in 2002 to four thousand five hundred dollars ($4,500) in 2011, (Ministry of Labour & Social Security 20011). This does not offset the increased costs faced by this group, while at the same time some receive no increase and others became unemployed. Inflation reduces the purchasing power of the consumer because of the devaluation of the local currency. One manifestation of this is the introduction of the new Five Thousand Dollars ($5000.00) note. As the Jamaican dollar devalues, low income earners have to make more sacrifices and survive on less because the cost of goods and services has increase exponentially. The current market price of one US dollar to Jamaican currency is 89: 1 respectively. Jamaica has being facing several external shocks such as surging oil prices and the removal of trade from the banana industry by Europe, inflation due to high food-prices, unprecedented increases in oil prices, and Domestic and External Public debt (Statistical Digest 2006) Quality of life is threatened by inflation making basic food, healthcare and education more difficult to access, this causes the morale of some to diminish. The...