Food prices up nearly 40%: IMF, BCCI favours targeted relief over price controls

Belize’s food prices have risen almost 40% since 2020, yet IMF guidance continues to suggest governments should protect vulnerable households directly rather than rely indefinitely on measures that restrain market prices.

For Belizean households, the arithmetic of the grocery basket has become steadily less forgiving.

The Statistical Institute of Belize’s Consumer Price Index shows the “Food and Non-Alcoholic Beverages” sub-index at 138.6 in July 2026, compared with a base of 100 in October 2020. That represents a 38.6% increase in the category’s overall price level in less than six years.

Successive external shocks have helped drive the increase. The pandemic disrupted supply chains, Russia’s invasion of Ukraine pushed up global food and energy prices, and the latest escalation of conflict in the Middle East has renewed concerns over energy and fertilizer costs.

The Government of Belize has responded with a mix of higher incomes and controlled prices. The national minimum wage rose to $5 an hour, while in August 2023 the Government imposed limits on wholesale and retail mark-ups on 32 basic goods, including food. The stated aim was to curb price gouging and monopolistic practices.

A new International Monetary Fund paper, titled “How to Classify and Choose among Food Assistance Spending Modalities: Practical Guidance on Targeting and Design,” raises a different question: rather than trying to lower the price everyone pays, should governments focus resources on helping those least able to afford it?

THE IMF’S FOUR QUESTIONS

In a September 17 article, IMF economists David Amaglobeli, Rodrigo Cerda, Tewodaj Mogues and Patrizia Tumbarello propose four questions governments should ask when food prices surge: Is food available? Is affordability the problem? Are markets functioning properly? And can those requiring assistance be identified?

The distinction matters.

Where food is physically unavailable because crops have failed or supply chains have broken down, the IMF considers direct food distribution appropriate. Where markets function and food remains available, but poorer households cannot afford it, targeted assistance such as vouchers becomes more attractive.

Broad price interventions fit less comfortably within that framework. The IMF argues price subsidies are attractive during emergencies because they can be introduced quickly without sophisticated systems for identifying beneficiaries. But they can also direct benefits to wealthier households that do not need assistance. The Fund recommends such interventions, when necessary, remain exceptional, temporary and narrowly defined.

Its preferred principle is that domestic prices should generally reflect international costs, while governments temporarily shield vulnerable households and viable small businesses through targeted fiscal support.

A BELIZEAN DEBATE UNDER WAY

That prescription lands in the middle of an existing policy dispute.

The Belize Chamber of Commerce and Industry has called for the reversal of the expanded price-control regulations and submitted draft legislation intended to return the regime to its pre-2023 form.

When The Reporter spoke with the Chamber in July, the BCCI argued that although price controls were intended to provide relief, research indicated they were an inefficient means of doing so. It instead supported targeted assistance for vulnerable households and measures addressing broader cost pressures. The Chamber described its proposal as a compromise that would restore the regulations that existed before the 2023 expansion.

The IMF’s latest framework does not specifically assess the effectiveness of Belize’s current controls. Its broader policy prescription, however, points in a similar direction on the issue of targeting.

Indeed, this is not the first time the Fund has made the argument in relation to Belize.

THE IMF HAD ALREADY WARNED BELIZE

IMF staff argued that international food-price increases should generally pass through to domestic prices, allowing prices to signal changes in supply and demand. Government should then subsidize vulnerable households rather than suppress that adjustment across the market. Targeted transfers through the social-safety net, it concluded, would be the most cost-effective approach.

The difficulty is implementation. A price control requires Government to regulate products and businesses; targeted assistance requires it to identify households that actually need help.

The IMF acknowledges that countries with weaker social-protection systems can struggle to do this effectively. Earlier analysis therefore suggested strengthening targeting mechanisms and, where necessary, using temporary price interventions with clearly defined exit strategies while those systems are developed.

With Belize’s food-price index almost 39% above its October 2020 level, the policy question is no longer simply how Government can prevent prices from rising. It is also whether scarce public intervention is better directed at controlling food prices for everyone or helping the households for whom those prices have become hardest to bear.