‘Food-related inflation impacts prices’

Food-related inflation has contributed significantly to price increases in Barbados over the past two years.

That is the conclusion of a Central Bank of Barbados analysis, based on Retail Price Index (RPI) information from the Barbados Statistical Service.

However, the monetary authority says this upward price movement was tempered by other categories of the RPI, including those influenced by lower international fuel prices. 

The RPI tracks changes in the prices of a fixed basket of goods and services commonly purchased by households.

In an assessment titled Factors Influencing Barbados’ Inflation Rates, which was published as part of the 2025 econoimc review, the Central Bank said that “price movements in specific categories rather than broad-based increases drove recent inflation outcomes”.

“Food and non-alcoholic beverages, miscellaneous goods and services, and restaurants and hotels accounted for the largest positive contributions to inflation between 2024 and 2025,”
it stated.

“Within food, higher prices for vegetables, dairy, eggs, and meats reflected adverse weather conditions and supply-side pressures, while stronger domestic demand contributed to higher prices in restaurants and hotels. Rising insurance costs also affected miscellaneous goods and services.”

The Central Bank also said that “downward price movements in selected categories helped to moderate
overall inflation”.

“Housing and utilities, transport, and recreation and culture recorded the largest negative contributions to inflation over the period, reflecting lower international fuel prices, easing freight costs, and moderation in building material prices. These declines partially offset price increases elsewhere in the basket,” it stated.

The Central Bank concluded that “overall, Barbados’ inflation experience reflects easing external price pressures alongside targeted domestic influences”.

“While inflation has moderated from post-pandemic highs, continued monitoring of global commodity prices, supply-side conditions, and domestic demand remains important for assessing inflation risks over the medium term,” it added.

In its analysis, the institution noted that RPI “comprises 12 major categories designed to reflect typical consumption patterns in Barbados, with food and non-alcoholic beverages, housing and utilities, transport, education, and restaurants and hotels together accounting for approximately 70 per cent of the total basket weight”.

“Inflation dynamics in Barbados reflect a combination of external and domestic influences, consistent with
the characteristics of a small open economy,” the Central Bank explained.

“Given the high import content of consumption, global factors such as international fuel prices, freight costs, and inflation trends in major trading partners play an important role in shaping domestic price movements.

“At the same time, domestic demand conditions, sector-specific supply constraints, and policy measures also influence inflation outcomes.

“Because the Retail Price Index basket is fixed and updated periodically, it does not capture all items purchased by households or shifts in consumer preferences in real time, and price changes in goods or services outside the basket, or purchased infrequently, may not be fully reflected in the official inflation rate,” it added.

The Central Bank also reminided that “Barbados’ inflation performance has historically moved broadly in line with that of its principal trading partner, the United States, while remaining low relative to regional peers”.

“Between 2024 and 2025, inflation in the United States declined from approximately three per cent to 1.9 per cent, while inflation in Barbados eased from 1.4 per cent at end-December 2024 to 0.7 per cent by November 2025,” it stated.

It was also pointed out that “compared with international inflation estimates for 2025 from the International Monetary Fund’s World Economic Outlook, Barbados’ inflation rate remained well below the estimated CARICOM average of 4.7 per cent”.

“Excluding high-inflation episodes in Haiti and Suriname lowers the regional average to approximately 2.5 per cent, which still exceeds Barbados’ inflation rate by 1.7 percentage points,” the Central Bank stated.

“Over the period 2019 to 2025, Barbados ranked within the lower 12th percentile of inflation rates globally.

“This favourable post-pandemic inflation outcome reflects a combination of easing international fuel prices and domestic policy measures aimed at limiting the pass-through of external price pressures, including the temporary social compact, the permanent removal of value added tax (VAT) on select items, and the temporary suspension of VAT and excises on hybrid and electric vehicles.”

In his organisation’s economic review, Governor Dr The Most Honourable Kevin Greenidge reported that inflation “slowed sharply on a 12-month moving average basis during 2025”.

“The 12-month moving average inflation rate declined from its peak of 4.7 per cent in March, 2023 and eased further from 1.7 per cent in November 2024 to 0.7 per cent in November 2025,” the Governor said.

“Smaller increases in food and beverage prices, together with price declines for clothing, utilities, household furnishings, transport, and recreational goods, supported the lower inflation rate.”

He also said that lower international oil prices and reduced freight costs also contributed to the decline in domestic inflation.

“Point-to-point inflation increased toward the end of the year, as domestic cost pressures emerged. Point-to-point inflation rose by 0.8 percentage points, moving from 0.9 per cent in November 2024 to 1.7 per cent in November 2025,” Greenidge said.

“Higher housing and utility costs, along with stronger demand for restaurant and dining services, accounted for most of the increase, partially offsetting price moderation recorded earlier in the year.”

In the 2026 economic outlook, Greenidge said that inflation was “expected to remain low and stable, though subject to external risks”.

“Easing international oil prices and lower freight costs should keep imported inflation contained, while stronger domestic demand may place upward pressure on the prices of selected services,” he noted.

“Overall, inflation is expected to remain near the lower end of the forecast range, broadly between one and 2.5 per cent over the near term.”

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