Skyrocketing prices hit Marshall Islands

Marshall Islands fuel prices hit the US$7.00 per gallon milestone this past week, adding an exclamation point to the prices for imported goods that have skyrocketed since last year.

Food, vehicle fuel, transportation costs for imported goods, and taxi prices are up dramatically compared to a year ago.

A less appreciated price increase is also beginning to kick in with a serious impact on the Marshall Islands. This is the cost of building materials, virtually all of which are imported from the United States where construction costs are rising dramatically, according to island contractors.

The International Monetary Fund said in a report released in mid-April that inflation is expected to be 6% this year — triple the level of recent years. But fuel prices today are over 40% higher in Majuro than they were 15 months ago.

In January 2021, the price of gas was US$4.70 and the price of diesel was US$4.85 at Mobil-supplied stations. At Pacific International Inc.’s fuel station, gas was US$4.50 per gallon and diesel US$3.80.

Fast forward to April 2022, and gas prices had jumped to $6.20 at PII and to as high as US$6.85 per gallon at Mobil-supplied stations. Diesel at Mobil-supplied stations hit US$7 per gallon last week for the first time in history — over $2 per gallon higher than 15 months ago. Even at PII’s station, which usually maintains the lowest prices on Majuro, diesel bumped up to US$5.90 a gallon, while gas was US$6.20. But if Majuro drivers think they’re struggling, the price of fuel on the remote outer islands in this watery nation passed the $10 per gallon mark in March before the latest round of increases, according to Member of Parliament Ota Kisino, who represents Wotje Atoll in the Nitijela (parliament).

Local taxis in Majuro, which provide the equivalent of public transport though all are privately operated, bumped fares by 50% in February when gas prices were approaching $6 per gallon. Even with the increased fares, drivers say they are having a tough time making ends meet.

Usually people get excited for the holidays, especially ones sanctioned by the government. But the Easter holiday break for schools and government offices was extremely difficult for taxis to make their daily US$35 turn in fee to the taxi owners due to a shortage of passengers on the road.

“It’s a struggle, I tell you,” taxi driver George Raymond said. “Some holidays bring good business like Christmas. Yet other holidays people don’t go around,” he said.

Local residents on limited budgets are being pinched by higher taxi fares that easily could rise again if fuel prices continue their upward trend.

Taxis aside, food prices are shooting up. Residents in the rural section of Majuro known as Laura have seen price spikes in staple food items. Eggs that small stores sold for less than US$4 a dozen last year are now selling for US$5. A dozen medium eggs that up to recently sold for less than US$3 per dozen in the downtown supermarkets are now selling for close to US$4. This is just one example of many.

A U.S.-based firm that contracts with the Marshall Islands government for construction-related work updated Majuro officials with price changes hitting the construction industry.

In the U.S., 71% of all construction materials costs went up, 98% of all labor wage costs increased, and 71% of all equipment prices are up. The U.S is funding a long-delayed five-phase new hospital construction plan that will now be confronted with significantly higher costs than as recently as a year ago.

All of these taken together add up to an extraordinarily challenging period for the Marshall Islands.

Meanwhile, the Marshall Islands government’s planning and statistics office that for decades produced a quarterly consumer price index has not issued a report since 2019. Lately it has been focused on wrapping up the national census that was conducted in late 2021. The preliminary results of the census indicate a massive outmigration to the United States, with 20% fewer people living in the Marshall Islands compared to 2011 when the last census was conducted.