Scarcity, Profit and the Price We Pay

592GUARDIAN♦ACCOUNTABILITY♦INTEGRITY IN JOURNALISM♦GUYANA

Scarcity, Profit and the Price We Pay: Guyana Needs an Honest Conversation About Inflation

---

OPINION BY : Hem Kumar October  2026

The immediate reaction is understandable: somebody must be blamed. And often, the blame falls on the merchant, wholesaler, importer or producer accused of “hoarding,” “price gouging,” or exploiting the people in a time of hardship.

Some businesses undoubtedly deserve scrutiny. There can be no defense for collusion, deception, artificial shortages, or the deliberate withholding of necessities merely to extract excessive profits from desperate citizens. But Guyana also needs a more serious national discussion—one that distinguishes genuine exploitation from the economic realities of scarcity, uncertainty and disrupted supply.

Not every higher price is greed. But neither is every higher price justified.

The Fear Behind Scarcity

A crisis changes how people think.

Whether the disruption comes from weather, crop failure, import delays, conflict abroad, high freight costs, fuel price increases, currency pressures, supply-chain interruptions or uncertainty in major shipping routes, the effect on ordinary citizens is immediate. People begin to fear that the goods they need today may cost far more tomorrow—or may not be available at all.

That fear is not irrational.

When families believe that food, medicine, fuel, baby supplies or household necessities may become scarce, they often buy more than they normally would. They stock up, not always because they are selfish, but because they are trying to regain some control over an uncertain future.

The same psychology affects businesses.

A shopkeeper who sees suppliers raising prices, deliveries becoming uncertain, or shelves emptying quickly is forced to make decisions under pressure. Should all stock be sold immediately? Should some be held for the following day? Should the business buy additional inventory at a higher price? Can it afford to sell current goods at yesterday’s price if replacement stock will cost much more tomorrow?

These are not abstract questions. They determine whether goods remain available at all.

What Prices Are Supposed to Do

Economist Friedrich Hayek argued that prices are more than numbers on a shelf. They are signals.

When the price of a good rises, it may be communicating that something has changed: supply has fallen, transport has become more expensive, demand has increased, inputs are scarce, or producers face greater risk. A higher price can encourage consumers to use less, discourage waste, and signal suppliers that there is a reason to bring more goods to market.

In theory, this is how the market responds to scarcity.

If a wholesaler knows that tomatoes, onions, cooking oil, fertilizer, fuel or imported food may be harder to obtain next week, the wholesaler may preserve some supply rather than sell out completely today. If producers expect higher future demand, the prospect of profit can motivate them to plant more, import more, transport goods faster, invest in storage, or take risks that they might otherwise avoid.

Profit, in this sense, can serve a social function. It can reward the person who stores, transports, finances, insures and supplies goods when circumstances are difficult.

The problem is that economic theory assumes a market where people have choices. For many Guyanese, especially low-income households, there are no easy choices.

 Scarcity Does Not Hurt Everyone Equally

A wealthy household can respond to rising prices by buying more in advance. It can stock a pantry, fill a freezer, purchase larger quantities, travel to multiple stores, or switch to more expensive alternatives.

A poor household cannot.

The mother deciding whether to buy vegetables or cooking gas cannot simply “adjust consumption” in the way economists often describe. The pensioner cannot substitute away from medicine. The family in a remote community cannot always travel to another market if one supplier raises prices. The worker whose salary has not kept pace with food costs cannot wait patiently for “market adjustments” to restore balance.

This is the central issue: scarcity is rationed through money.

When prices rise, goods do not necessarily go first to those who need them most. They go to those who can pay. A family with cash can buy several weeks’ supply. Another family may leave with less food, or none at all.

That may be a market outcome, but it is not automatically a just outcome.

Guyana must therefore reject the lazy claim that high prices are always proof of greed, while also rejecting the equally dangerous claim that every price increase is beneficial because it reflects the free market.

The real question is simpler: what is causing the increase, and who is bearing the burden?

Not Every Form of Hoarding Is the Same

The word “hoarding” is often used too loosely.

A household that purchases a few extra bags of rice, canned goods or toilet paper because it fears shortages is not necessarily acting immorally. It is responding to insecurity. The same is true of a retailer that retains a limited quantity of stock to ensure that customers can still buy necessities tomorrow.

But there is a line.

A business that holds inventory because replacement stock will cost more, because deliveries are delayed, or because it is trying to prevent a total stockout may be making a rational commercial decision. It takes risks: goods can spoil, be stolen, be damaged, or fall in value. If the business gets its calculation wrong, it may lose money.

That is different from a dominant supplier deliberately withholding essential goods, creating artificial scarcity, coordinating with competitors to raise prices, or exploiting the fact that consumers have nowhere else to go.

The first may be a response to uncertainty. The second is abuse.

Guyana’s laws and consumer-protection institutions must be capable of telling the difference.

Guyana’s Inflation Problem Is Not Only About Merchants

The public is right to ask why prices remain high while Guyana is presented as one of the fastest-growing economies in the world.

Oil wealth and impressive GDP figures mean little to the ordinary citizen who cannot comfortably afford food, rent, transportation, school supplies or basic household goods. Economic growth that does not improve purchasing power, food security and daily living conditions will inevitably produce frustration and distrust.

But blaming retailers alone will not solve the underlying problem.

Guyana’s food and consumer-price pressures are tied to wider structural weaknesses:

♦ Heavy reliance on imported food, inputs, machinery, fuel and consumer goods

♦ High shipping, freight and insurance costs

♦ Limited storage, cold-chain and distribution capacity

♦ Post-harvest losses and weak farm-to-market connections

♦ Weather-related disruption, flooding and drainage failures

♦ Gaps between what farmers receive and what consumers pay

♦ High transportation costs between regions

♦ Market concentration among importers, wholesalers and retailers

♦ Weak price transparency across the supply chain

This is why the solution cannot be limited to speeches condemning “greedy businessmen,” nor can it be limited to asking citizens to be patient. The country needs systems that make food and essential goods genuinely more available, more competitive and more affordable.

Government Must Protect Citizens Without Destroying Supply

Price controls may sound attractive when people are hurting. But poorly designed controls can create another crisis: empty shelves.

If a retailer is forced to sell goods below replacement cost, that retailer may stop ordering them. If an importer cannot recover higher freight or currency costs, the importer may reduce shipments. If producers have no incentive to expand output, shortages can worsen.

That does not mean government should stand aside. It means government must intervene intelligently.

The State should aggressively investigate collusion, deceptive pricing, artificial shortages, abuse of market power and unjustifiable price increases in essential items. Consumer-protection agencies must have the resources, data and independence to examine complaints promptly and act publicly.

But enforcement must be accompanied by practical measures:

♦ Publish regular retail, wholesale, farm-gate and import-price information for key essentials

♦ Require transparency where sharp price increases cannot be explained by real costs

♦ Investigate whether dominant firms are restricting supply or coordinating prices

♦ Strengthen market monitoring across all regions, not only Georgetown

♦ Support storage, cold-chain facilities and farm-to-market transportation

♦ Reduce post-harvest losses and improve drainage and agricultural resilience

♦ Build strategic reserves of selected essential goods for emergencies

♦ Expand targeted support for vulnerable households, including school-feeding programs and food assistance

♦ Ensure that farmers receive fairer returns while consumers pay less through shorter and more efficient supply chains

The goal should not be to punish every business that earns a profit. The goal should be to ensure that profit comes from providing a genuine service—not from trapping citizens in a moment of desperation.

Citizens Also Need Information

Public anger thrives where information is absent.

Transparency would help change that.

A consumer should be able to see the difference between a temporary shortage and manufactured scarcity. A farmer should be able to know what wholesalers are paying. A retailer should be able to explain a legitimate increase with evidence. Government should be able to identify where margins become excessive.

This is not about defending businesses from criticism. It is about making criticism accurate, evidence-based and effective.

A society cannot fight inflation through rumor, political slogans or public shaming alone. It must understand how prices move, who benefits, who loses, and where intervention is actually needed.

The Moral Test

There is nothing inherently immoral about making a profit during difficult times. Profit can reward enterprise, foresight, investment and the willingness to take risks when others will not.

But there is something deeply wrong when citizens are forced to choose between food and medicine while others manipulate scarcity for private gain.

That is the moral test.

A business that imports goods at higher cost, transports them through difficult conditions, keeps workers employed, maintains supply and earns a reasonable return is performing an important role. A business that exploits fear, conceals stock, coordinates prices or abuses a dominant position is not serving the market—it is abusing the public.

The question is not whether markets should exist. They must. The question is whether Guyana will build markets that serve the people, or allow scarcity to become another opportunity for the powerful to profit while the vulnerable go without.