Do Not Hike Wages to Match Inflation

• As inflation rates climb throughout the Caribbean, Governor of the Central Bank of Barbados, Cleviston Haynes is cautious about wage adjustments to match it. He noted that a wage adjustment to match inflation is really not the first best option for the country considering that once wages increase, there will be increased prices across the board. 
• Haynes emphasized that the supply shock that the region is facing currently is impacting largely food and energy, and this is what is driving the inflation rate. He further outlined that in some countries, the focus is not on the headline inflation rate but really on what they call the core inflation rate, that is you take out food and energy because those are the things that you really have very little control over, and then you try to focus on the underlying inflation rate. 
• Considering this, if there are wage adjustments the region runs the danger of trying to have wage increases that are adapting to inflation, which is a temporary cycle. Instead, the Governor believes that the Caribbean should address the impact of these prices on the average citizen by framing targeted measures that are perhaps time-bound since food and energy price increases are really likely to be transitory.

(Source: Trinidad Express Newspapers)