Ascension : Increase In Freight
Submitted by The Islander (Gavin Yon) 17.02.2005 (Article Archived on 03.03.2005)

The St Helena Government recognises that an increase in freight charges will result in members of the public facing some increase in costs.

The St Helena Government recognises that an increase in freight charges will result in members of the public facing some increase in costs. But how big is the impact? Can it really be described as “immense”?

Government Economist, Adrian Green, explained first vegetables and meats produced on the Island will be unaffected by freight increases as it is not carried on the RMS St Helena.  Second, (and leaving aside the fact that retailers will have some stocks) there is no reason for retail prices to increase by as much as 7.5% because of the freight increase. While this might sound rather unusual, Adrian broke the costs down using a tin of tomatoes and other produce as an example to show that any increases should be much lower.  He said: “the main cost elements in the shelf price of a good are the costs in the UK or Cape Town, duty, wharf age, freight and the retailers’ margin.”  So when one cost element increases by 7.5% the good itself need not increase by 7.5%. For example a standard tin of tomatoes, which today costs 60p, should increase by no more than a penny (i.e. 1.6%), and a packet of Corn Flakes costing £3.40 by no more than 7p (i.e. 2%).  While the figures are only an example, the St Helena Government hopes that this reassures members of the public that there should not be any big increases in retail prices because of the change in freight costs.

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