Rising Cost of Living

[DrChrisHE]

Here are some prices from the SPM Jumbo on Sat, April 12 th(SPM)
Chinola (bag oranges for OJ) 49.95/5 lb
cebollas/ Onions-yellow 49.95/lb
papas/ potatoes (5lb bag) 99.75
Pi?a/pineapple 34.95
Aquacate/avocado 29.95
limones/limes (2lb bag) 99.90 (about 49.95/lb)
apio/celery 39.95
platino verde 31.80 about 8 pesos each
Yuca 9.95/lb
cucumber 9.95/lb
lettuce iceberg head 35.54 ea
apples 54.95/lb
carne molida/ground beef 89.95/lb
pollo fresco (gringo chicken) whole 38.85/lb
almendra de res (beef shoulder) 35.95/lb
yogurt-60z 24.45 ea
Lurpak Danish butter 94.45 ea double pack (400 gms about 1 cup)
Cream Cheese-Phily Brand 94.45/8oz
Dos Pinos Leche/Milk 33.8oz37.95 ea
Brahma Cerveza grande 97.90
2L bottle of Pepsi 49.95
tomatoes-canned 27.95
Buttoni Pasta-dry integral 500gms 79.95
Chicharones-large bag 42.00
Harina Maiz/corn flour 11oz 8.95
Esponja/Sponge 21.95 for two
Kleenex 49.95
Don Huevo Eggs-Jumbo size 170.90/flat
Club Social crackers-integral 34.95 / 234 gms
tomates invierno/cherry tomatoes 49.00/package
Lidar fundas/ Plastic kitchen bags 34.00

Also, a 5gall jug of agua pura is now 50 pesos at our local colmado (was 40 pesos in April 2006).

 

[NALs]

Do increases in the cost of living affect all socio-economic strata equally in the DR?

No. From my understanding, it goes something like this:

The upper class is not affected by such increases, at least not to the degree that they would alter their consumption patterns. These folks are so financially secure that disruptions in the local economy has little effect on them or disruptions of any other kind, for that matter.

The upper middle class feels it, but many of these simply reduce their consumption of luxury goods/services. Hence, they feel it, but it doesn't threatens their lifestyle which is on par with their counterparts in developed countries.

At the lower middle class level is when a rise in the cost of living begins to truly affect people's consumption patterns. These folks barely have money for a few luxuries and they are usually cut out when the cost of living increases. Also, purchases on primary goods/services consist of a significant proportion of their income that even in good times they have to watch their budget. The threat to their standard of living is very real.

At the working class level it truly affects people. Here the decision turns to what they will essential foods/goods/services they will consume at the expense of other essential foods/goods/services.

The lower class is screwed in good times, so one can only imagine in bad times. These folks never have enough money to fulfill a basic standard of living, rely extensively on expensive short term credit (the term "fiao" is well known in this class). A severe increase in cost of living could lead many families at this level to decide who will eat on what days and who will not or how often they will eat in a day, etc.

Those living below the poverty line (mostly illegal immigrants, people living in the worst parts of the slums, in severe rural poverty, etc) are so screwed economically, that many of them are completely outside the official moneyed economy and may resort to bartering or simply going hungry. Having money to buy food alone is a problem, those that live in the countryside may lessen their dependence on money through subsistence farming.

-NALs

 

[mountainannie]

DR rice harvest

Dominican Republic: An excellent harvest of rice is expected

Dominican Republic: An excellent harvest of rice is expected

By Oryza News on April 08,2007

In Dominican Republic has begun the harvesting of the spring rice
(sowing between December and April) and according to the Secretariat of
Agriculture is expected an excellent yield of around 5 million quintals.
The production of spring together with the collected harvest of winter
(sowing between May and August) assures the provision sufficient
throughout the year: supply for domestic demand and for keep reserves.

During 2006 rice harvest reached 10 million quintals which allowed the
self-sufficiency of the country for this basic cereal. The Dominican
Republic accounts with 11 rice areas, emphasizing the North-eastern zone
where annually they seed 1 million tasks *.

Rice consumption in the country is of 700,000 quintals monthly

* 1 task = 627.27 m2

 

[AK74]

No. From my understanding, it goes something like this:

The upper class is not affected by such increases, at least not to the degree that they would alter their consumption patterns. These folks are so financially secure that disruptions in the local economy has little effect on them or disruptions of any other kind, for that matter.

The upper middle class feels it, but many of these simply reduce their consumption of luxury goods/services. Hence, they feel it, but it doesn't threatens their lifestyle which is on par with their counterparts in developed countries.

At the lower middle class level is when a rise in the cost of living begins to truly affect people's consumption patterns. These folks barely have money for a few luxuries and they are usually cut out when the cost of living increases. Also, purchases on primary goods/services consist of a significant proportion of their income that even in good times they have to watch their budget. The threat to their standard of living is very real.

At the working class level it truly affects people. Here the decision turns to what they will essential foods/goods/services they will consume at the expense of other essential foods/goods/services.

The lower class is screwed in good times, so one can only imagine in bad times. These folks never have enough money to fulfill a basic standard of living, rely extensively on expensive short term credit (the term "fiao" is well known in this class). A severe increase in cost of living could lead many families at this level to decide who will eat on what days and who will not or how often they will eat in a day, etc.

Those living below the poverty line (mostly illegal immigrants, people living in the worst parts of the slums, in severe rural poverty, etc) are so screwed economically, that many of them are completely outside the official moneyed economy and may resort to bartering or simply going hungry. Having money to buy food alone is a problem, those that live in the countryside may lessen their dependence on money through subsistence farming.

-NALs

An excellent insight!

I`d also add some reflection on the plight of another social group that was not mentioned but is for the most interest for DR1 members - social group of ex-pats. By now already rather numerous.

This group in turn can be sub-divided in two subgroups: business owners and retirees/pensioneers.

Business owners won`t suffer much even in a worst case economic scenario. They will increase their prices and will stay afloat. They do it even now at will and for instance in Sosua we can witness hotel rooms going from $25 up to $50 in just a bit more than a year in some hotels (without any renovation or any additional expenses for the owner), or a plate of spagetti $200-$250RD or a piece of meat $450-$500RD in some restaurants (that is 1 000 % mark-up compared to the price of spagetti or meat even in expensive Playero!)

Every day Continental and AA bring enough suckers to pay these crasy prices.

Not so bright is the future for retirees. They come to Dominican Republic nowdays mostly in their fifties or early sixties. Being still pretty much healthy and phisically active.

But in ten-fifteen years the overwhelming majority of them will have to return back to the States.

They will be in their seventies or even eighties by then and will need much better and much more serious medical care than can be available in Dominican Republic.

On top of the health considerarions, those retirees whose pension (retirement benefit) is truly fixed (without adjastments to inflation and to rising cost of living) will have to go back to work for a supplimental income to be able further just to live (yes, in their seventies-eighties!).

They won`t be able to find any non-construction work in Dominican Republic , so their return to US or England or Canada is inevitable.

Now we are witnessing a huge influx of NA expats-retirees who drive the prices up with their habit to overpaying and overspending. In ten years we will see another demographic change- reversal. When many of them will go back. To the not so bright sunset future.

I`d love to sound more optimistic, but facts are really cold and stubborn thing.

 

[catcherintherye]

Thank you NALs and AK74 for the informative comments.

NALs, you provide a good in-depth analysis, and one that describes basically a very similar effect in the US. The main difference, as I see it, is that in the US many of the poorest of the poor really don't have subsistence farming to fall back on, since many are located in urban areas where there is no arable land.

AK74, you added a much needed view point for ex-pats and retirees.

Allow me to draw two conclusions from your observations.

First, there is a definite correlation between the cost of living (CPI) and the socio-economic status of various groups. Obviously there is good reason to examine the gini coefficient in relation to the CPI, the gini coefficient being the number that represents the disparity between the top income earners and the bottom earners.

Secondly, there is reason for potential ex-pats to understand the effects of a rising cost of living on a fixed income. It is also necessary to recognize the possibility of a prolonged recession. In that case, perhaps a fixed income would be preferable to a declining income or no income at all.

Of course no one knows for sure how all of this will play out, and there are sure to be many twists and turns along the way. Awareness is the first step in circumventing personal disaster, and one more people should be actively pursuing.

 

[rio2003]

An excellent insight!

I`d also add some reflection on the plight of another social group that was not mentioned but is for the most interest for DR1 members - social group of ex-pats. By now already rather numerous.

This group in turn can be sub-divided in two subgroups: business owners and retirees/pensioneers.

Not so bright is the future for retirees. They come to Dominican Republic nowdays mostly in their fifties or early sixties. Being still pretty much healthy and phisically active.

But in ten-fifteen years the overwhelming majority of them will have to return back to the States.

They will be in their seventies or even eighties by then and will need much better and much more serious medical care than can be available in Dominican Republic.

On top of the health considerarions, those retirees whose pension (retirement benefit) is truly fixed (without adjastments to inflation and to rising cost of living) will have to go back to work for a supplimental income to be able further just to live (yes, in their seventies-eighties!).

They won`t be able to find any non-construction work in Dominican Republic , so their return to US or England or Canada is inevitable.

Now we are witnessing a huge influx of NA expats-retirees who drive the prices up with their habit to overpaying and overspending. In ten years we will see another demographic change- reversal. When many of them will go back. To the not so bright sunset future.

I`d love to sound more optimistic, but facts are really cold and stubborn thing.

This is a situation that I can see happening when the recession really bites. A huge number of Brits in an effort to beat the "gloomy,cold,expensive" UK have moved abroad to what was previously just a holiday destination whether it be Spain, France or the DR to name but a few. A lot of these are on a fixed pension as their only income and originally thought their move was a good one - to a warm country, cheap prices, just one long holiday.

I am not so sure that a lot of them will feel that way in times to come.

I must stress I am not talking about people who have planned well, have capital, investments, fingers in other pies so to speak, but of those who have merely swapped their retirement years to the DR with no other income than a pension to live on.

 

[Chirimoya]

Thank you NALs and AK74 for the informative comments.

NALs, you provide a good in-depth analysis, and one that describes basically a very similar effect in the US. The main difference, as I see it, is that in the US many of the poorest of the poor really don't have subsistence farming to fall back on, since many are located in urban areas where there is no arable land.

Remember also that the poor in the DR do not have anything near the same welfare safety nets as their counterparts in developed countries.

Many get remittances, and these undoubtably make an enormous difference, but many others don't. Some families are on government welfare plans like Solidaridad (a card that gives them about US$20 worth of food per month) but this is awarded according to political allegiance as much as actual need. Others depend on charitable organisations.

In the DR, many (most?) poor people are also urban dwellers with limited possibilities for growing their own food.

 

[catcherintherye]

Thank you Chirimoya. The issue of remittances could become huge if a recessionary trend continues for any length of time. The amount of money coming from remittances (@ 22 billion US$) will certainly decline as US jobs are lost or hours are cut back.
Also the issue of urban poor brings up another question of possibility of increased crime and what that might mean for the country.

 

[J D Sauser]

"limon"

Does anybody know what's going on with lemons (limes) lately.
They usually sell around 17 to 47 Pesos a bag, depending on the season. Just lately, I found them at over 100 Pesos (!) at Tropical (Puerto Plata) and over 70 Pesos for the same bag at Playero (well, for ONCE something is less expensive at Playero after all).
Ar they now being imported from Nueba Yol or what?

... J-D.

 

[Skippy1]

The simple economic model is the Pyramid
divide it into lateral sections.
Bottom layer is the poor or low paid I do not use class it's and outdated term.
the next the Middle income
top section the High earners or just simply the wealthy


The point where you put the lateral lines are the divides.

Now the Pyramid works like this:
The number of people at the top can never out number the people at the bottom and the layer below that will always be more numerous but never as many as the people in the bottom.

Reason is that all the layers are only sustained by the volume or numbers in the base.

If you check list of worlds richest people you wil see this effect very clearly.
The top contain people from high population countries Ie USA Europe India Russia etc. The wealth is built on the poor the morre poor you have the more opportunity you have to accumilate wealth. Sounds odd!!
Ok let me explain
If you own a business that sells (pick something out of the air) Hairbrushes.
In order to sell them you must price the product at a level that the middle layer can easily afford this way you will get the best return per item sold.....no good making them too expensive as the number of high earners is more limited and once they have one they wil be less likey to loose it or break it if its worth a fortune thus limiting your sales.

So you need the lower levels to be able to afford and The essential part they must keep buying. This make the business owner rich untill the people find another company to supply either cheaper or better quality.

The problem for most economy's is the keep enough people poor but not too poor that they cant buy. I hope that makes sense.

Ok the DR has rich people but in truth no self made Dominican will ever make the top 10 richest list because the customer base is too small here. This is why you are seeing more and more globalisation.....people trying to expand their business and control over more and more people.

However the simple truth is all wealth is built on the poor and it is impossible to remove the bottom layer. If you reduce the number of poor you reduce the number of middle earners and thus the number of high earners and the pyramid gets smaller.

People who dream of ending poverty are just that Dreamers. All they will achieve is to shift the balance in one country to another....

The problems we see now with food riots is the adjustment process where the poor cant pay any more and the price must come down.
A very simplistic explination of a very complex subject but the brutal truth is the rich need the poor to keep them rich and more poor there are the higher the potential for them the become richer.

the middlelayer are the safety net for the Rich as its them than manage the poor a bit like the school the head is isolated from the kids by the teachers......

 

[cobraboy]

If you own a business that sells (pick something out of the air) Hairbrushes.
In order to sell them you must price the product at a level that the middle layer can easily afford this way you will get the best return per item sold.....no good making them too expensive as the number of high earners is more limited and once they have one they wil be less likey to loose it or break it if its worth a fortune thus limiting your sales.

Not exactly. A business seeks to maximize revenue, which is a function of quantity vs. price. Price elasticity is the determinining variable.

The problem for most economy's is the keep enough people poor but not too poor that they cant buy. I hope that makes sense.

The #1 problem with the DR economy is too many people chasing too few resources, period.

 

[DRob]

The #1 problem with the DR economy is too many people chasing too few resources, period.

Actually, I'd say the main problem is too few people controlling too many resources.

The "problem" with DR (and virtually every other nation on the planet) is that there's no viable middle class, other than AZB's friends. DR consists of an exceptionally wealthy and powerful upper strata that make up less than 10% of the population, and working class to poor people who comprise about 80-85$ of the rest.

There are relatively few jobs in DR that pay anything approaching a middle-class wage in NA or Western Europe. Nor is there much expectation for that to change radically, as public education and health intentionally lags, as the upper class has no interest in fostering future competition for their children. In fact, many expats have written in this forum of the general feeling of helplessness among the locals.

Perversely, that's what helps drive much of the expat traffic to DR. Their pension incomes would give them a meager living in NA or the UK, and they'd have little if any influence on their surroundings or circumstances. However, in DR a $1,500-2,500 USD monthly check makes them the de facto middle class. They have maids, drivers, private schools for the kids, young lovers, and get to pursue writing, travelling, beach bumming, volunteering, or whatever other hobby interests them.

In the UK, on that income, the only thing they'd be doing is asking you if you'd like to supersize your fries.

So the financial squeeze is relative. While they may not appreciate the rising costs of celery and cable, many of them are not really forced to make the "medication vs. food" decision, which is a truer (though admittedly not the only) sign of financial hardship.

Does this mean that expats are doing something wrong? Of course not; everyone has a right to improve their living conditions. Expats simply change (or maintain) their socioeconomic class by exchanging countries, the price of admission being a one-way plane ticket.

 

[Skippy1]

Cobraboy
I said it was a simplistic model but one that can answer all your question with deeper analysis.
Point 1. wrong it s a function of price over need.

Point 2 Its again wrong you are putting the people in the wrong group on a global scale. Middle ranked people hear are not in the same layer as others from USA Europe. What you are talking about is the lower layer fighting for a bigger slice of the cake.
Eg if Dr had the same structure as say China or Korea the availablility of jobs would be 100 times that here. Ask why the world goes to Taiwan Korea and China to get its manufacturing done (the wages are almost the same) its because the skill base is bigger and the population also.....more over its a misrepresentation of the status of DR in a global scale.

 

[cobraboy]

Actually, I'd say the main problem is too few people controlling too many resources.

The rich are hording resources?

You speak in social terms. My comment is in pure economic terms. In a rising tide of resources, the "rich" would still have "theirs", but everyone wold have more, given a stagnant population. Economic issues create social problems, and usually the economic problem is as how I described: too many people chasing too few resources.

But as with rats in a cage, a cage can only support so many rats peacefully regardless of the available resources.

If the population of the DR were halved, how many fewer social problems would there be?

 

[Skippy1]

DRob,
Good observation re expats. You take a medium sized fish and put it in a small tank and it is king put same fish in a lake and its a minnow.
Its all part of the cycle who knows in 1000 years maybe Dominicans will be doing it in reverse.
Interesting thing about Jamaicans living in UK and the retiring back to Jamaica.
Some are finding it hard to adapt to the fact they are now the elite and wealthy....where once they were poor and lived life freely without a care now they are the hunted and robbed by the same people they used to play with on th beach.
as kids. Many have returned to the Uk since.

Skippy1

 

[Skippy1]

The rich are hording resources?

You speak in social terms. My comment is in pure economic terms. In a rising tide of resources, the "rich" would still have "theirs", but everyone wold have more, given a stagnant population. Economic issues create social problems, and usually the economic problem is as how I described: too many people chasing too few resources.

But as with rats in a cage, a cage can only support so many rats peacefully regardless of the available resources.

If the population of the DR were halved, how many fewer social problems would there be?

Simple answer more.
The high number of people without jobs is what keeps wages low if eveyone had a job then wages would rise.

 

[DRob]

Cobraboy said:

Not exactly. A business seeks to maximize revenue, which is a function of quantity vs. price. Price elasticity is the determinining variable.

Cobraboy
I said it was a simplistic model but one that can answer all your question with deeper analysis.
Point 1. wrong it s a function of price over need.

Actually, you're both right. Elasticity can refer to supply, demand, or price.

Price elasticity is the determining variable, but only if it is contingent upon demand. In Cobraboy's model, higher demand elasticity drives up volume (or supply) elasticity, which has the inverse effect of driving down costs, creating little margin, or price inelasticity.

However, if there's a shortage (real or artificial) of an item, and demand is still strong, then the providers of the item can largely set the market price.

Interesting arguments. Where but DR1 can you have a supply-side vs. demand-side debate on economics without lulling everyone to sleep? :glasses::glasses::glasses:

 

[Skippy1]

Expanding the model

Cobraboy said:

Not exactly. A business seeks to maximize revenue, which is a function of quantity vs. price. Price elasticity is the determinining variable.




Actually, you're both right. Elasticity can refer to supply, demand, or price.

Price elasticity is the determining variable, but only if it is contingent upon demand. In Cobraboy's model, higher demand elasticity drives up volume (or supply) elasticity, which has the inverse effect of driving down costs, creating little margin, or price inelasticity.

However, if there's a shortage (real or artificial) of an item, and demand is still strong, then the providers of the item can largely set the market price.

Interesting arguments. Where but DR1 can you have a supply-side vs. demand-side debate on economics without lulling everyone to sleep? :glasses::glasses::glasses:

Yes you are right of course I was trying to keep it simple as once you get into the market forces bit it can become complicated. You then get into how people force markets and inflate prices, However sustainability and balance are hard to achieve.....a bit like the sea it can be calm one day and rough the next the reason may be a storm out at sea 500 miles away.

Skippy1

 

[DRob]

The rich are hording resources?

You speak in social terms. My comment is in pure economic terms. In a rising tide of resources, the "rich" would still have "theirs", but everyone wold have more, given a stagnant population. Economic issues create social problems, and usually the economic problem is as how I described: too many people chasing too few resources.

But as with rats in a cage, a cage can only support so many rats peacefully regardless of the available resources.

If the population of the DR were halved, how many fewer social problems would there be?

Good points, CB. Here's a few items:

1) A "rising tide of resources" in a highly stratified (from a socioeconomic viewpoint) third world country is illusory at best. The tide's been rising, but the rats are drowning, anyway (how's that for mixing metaphors)? :glasses:

2) Let's try the reverse. If the population were doubled, how many more problems would exist? Proportionately speaking, relatively few. See, in my view, it's not about how many people are in the country so much as what access they have to the tools to enable themselves to build their own boats (to take full advantage of that rising tide you mentioned).

These tools include but are not limited to real education, health care, access to capital and experience in business or trade. We know that all these things are available in DR - if you're in the right class.

If not, you can aspire to opening your own colmado or driving wealthier tourists around the island.

Here's a question for Hillbilly, a professor at one of the better universities in the country: in relative socioeconomic terms, how would you break down the freshman class at PUCMM for any given year? What percentage would be upper class, middle class, etc...?

 

[catcherintherye]

correction

Thank you Chirimoya. The issue of remittances could become huge if a recessionary trend continues for any length of time. The amount of money coming from remittances (@ 22 billion US$) will certainly decline as US jobs are lost or hours are cut back.
Also the issue of urban poor brings up another question of possibility of increased crime and what that might mean for the country.

Sorry, a slight typo. Instead of $22 billion US, it should read $2.2 billion US. Just a little . can make a huge difference. On top of that, it is closer to $3 billion US. Double sorry.