Inflation in St Vincent and the Grenadines

A short history of inflation in St Vincent and the Grenadines

The Shared Currency (1976 onwards)

St Vincent and the Grenadines uses the East Caribbean dollar, which has been fixed to the United States dollar at 2.7 to 1 since 1976 and is issued by a central bank shared with seven other territories. The country therefore has no monetary policy of its own, and its inflation is essentially the cost of what it imports, which is most of what it consumes.

The Food and Fuel Spike (2008)

The peak of 11.6% in the year to March 2008 is the global spike of that year arriving with nothing to absorb it. The shared currency has held its value for close to fifty years, which is a considerable achievement for a group of very small economies, and the cost is that adjustment to any shock has to happen through wages, prices and the budget instead.

Post-Covid Inflation (2021 to 2023)

In St Vincent and the Grenadines, prices rose fastest in October 2022, at 7.5%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.