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By Ryota Dei

HAGÅTÑA, Guam (Pacific Daily News, Apr. 5) - Climbing fuel prices have increased the cost of shipping goods to Guam, and island residents said they're tightening their budgets.

The effect of the fuel price increase especially strains the pockets of consumers on Guam, where 95 percent of imported goods are shipped in, and inadequate public transportation forces most people to drive.

"The price (of groceries) went up a lot ... since the beginning of this year," Marie Lujan, 32, of Barrigada said while shopping at California Mart yesterday and holding a copy of an advertisement that lists items on sale.

Lujan was shopping for vegetables, canned food, milk and frozen meat on sale at California Mart yesterday. Rising prices made her become more price-conscious when shopping for groceries, she said.

"So now I shop around to look for a cheaper place to buy groceries," she said. "I have to do some research now before I start shopping, like looking into newspaper ads and see what's on sale."

Matson Navigation Co. announced earlier this week that the company would raise its fuel surcharge from 9.2 to 10.5 percent beginning April 18 for Hawai`i, Guam and the Commonwealth of the Northern Mariana Islands.

Tae Min, president of California Mart, said the increase in prices of vegetables stem not directly from the rising shipping cost, but from the increase in prices of vegetables in California, from where the store usually orders perishable foods.

In California, farmers and businesses are facing higher fuel prices, and the additional financial burden will eventually be passed on to consumers, according to a story published by the San Francisco Chronicle.

The story stated anything that needs to be shipped, or services that depend on driving, may cost more as a result.

Gasoline prices also have hit $2.63 a gallon on Guam -- among the highest nationwide.

Min acknowledged the increasing shipping fee has put his business in "a sensitive situation," where he has to keep an eye on fuel prices to determine whether to increase the price of food items.

"So far, I think I can handle (the effects of fuel-price increases without raising prices of goods), but it will depend on the future situation," Min said.

Roseanne Jones, associate professor of finance and economics at the University of Guam, said residents have entered into a period when they have to become more selective of their purchases and make wiser budgeting decisions.

"We will probably experience fewer discretionary purchases and even more short-term credit borrowing if consumers still don't adjust to this kind of environment. Basically, they have to start making a decision about what they can forgo and what they cannot forgo."

Jones also said the fuel price increase will squeeze business owners' profit margins.

"Certainly, they are going to try to keep the prices within reason, depending upon their profit margin," she said. "On Guam, it's easy to pass on those price increases to consumers because of a lack of competition from other business firms. So, when retailers get squeezed, consumers do, also."

Jesse Jones, a butcher at California Mart, said the prices of meat have risen in the past few weeks. He said a bag of frozen pork chop steak marked $12.95 per bag used to be around $11.

With little indication that fuel prices will drop anytime soon, the pocketbooks of fixed- or lower-income people will be hit hard.

Rosalinda Dela Cruz, 83, lives with her daughter and son-in-law in Dededo with her Social Security benefit.

"It affects especially me because my income is $300 a month," she said of the rising cost of consumer items.

Dela Cruz goes shopping at California Mart, where she noticed prices have increased minimally -- by 2 cents or 3 cents for the items she buys. "Every time when I receive my pension, I come here to shop," she said.

Roseanne Jones said ever-climbing costs may prompt employees to ask for wage rate increases.

"I think consumers are trying to say, 'OK, now, when do we get more? We have to survive in this economy,'" she said.

Gary Hiles, economist at the Guam Department of Labor, said if the cost of doing business goes up, the higher cost can be passed on to customers, such as tourists.

While acknowledging that the rising fuel cost increases pressure on consumer spending and slows down the U.S. economy in the short run, Roseanne Jones said there is also good news in an inflationary environment.

"Given a little bit of time, you begin to see inventiveness," she said. "When all these kinds of problems happen, people become creative. You will see new technologies. Sometimes, these kinds of pressures create new market, new products and new solutions."

Both Roseanne Jones and the people interviewed at the grocery store said they don't expect the prices of goods will go down any time soon, and consumer prices are likely to continue their upward movement as long as the fuel price continues to rise.

"The way I see it, the price will go up more in the future. I guess I just have to keep shopping around to find a cheaper place," Lujan said.

April 6, 2005

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