Prices in Jamaica rose 0.4 percent on average in September compared to August 2015, the Statistical Institute of Jamaica (STATIN), reported. Inflation in August recorded an increase of 0.8 percent. According to the Statin report. The All Jamaica ‘All Divisions’ Consumer Price Index increased, with the index moving from 229 to 230.
The calendar year-to-date movement was 2.6 percent, while for the last 12 months, year over year inflation stood at 1.8 percent.
Increases in cost in the Education category, amounted to 5.3 percent due to the increase in tuition fees, the second highest movement was for the division Food and Non-Alcoholic Beverages which moved up by 1.1 percent. Two divisions recorded declines which moderated the overall movement in inflation with Housing Water, Electricity, Gas and other fuels fell by 1.2 percent and the Transport division is down by 1 percent.
The other divisions that recorded increases are: Alcoholic Beverages and Tobacco 0.1 percent, Clothing and Footwear 0.6 percent, ‘Furnishings, Household Equipment and Routine Household Maintenance 0.1 percent, Health 0.2 percent, Recreation and Culture 0.5 percent and Miscellaneous Goods and Services 0.2 percent while the divisions of Restaurants and Accommodation Services and Communication each recorded negligible movements.
Inflation moderates in September
Jamaica’s business confidence rebounds
Business confidence levels rebounded in August according to the latest survey of the perception of present and future business conditions relative to the previous survey a report from Bank of Jamaica shows.
Persons in the business sector were responding to the questions “In general do you think business conditions are better or worse than they were a year ago in Jamaica” and in response to the future, “Do you think that in a year from now business conditions will get better or get worse than they are at present”?
The index of present business conditions increased to 158.4 from 130.3 and the index of future business conditions rose to 150.7 from 135.2 in the previous survey. The survey is conducted by the Statistical Institute of Jamaica on behalf of Bank of Jamaica amongst Chief Executive Officers, Managing Directors and Financial Controllers. The most recent survey was conducted in August 2015 and had 319 respondents.
Major gains in Jamaica’s current account
For the March 2015 quarter, the Current Account enjoyed a surplus of US$39.4 million, an improvement of US$149.5 million over the similar period in 2014 as a result the current account for the year to June is negative US$45 million versus a deficit of US$398 million in the first half year in 2014.
The outturn for the June quarter reflected improvements on all sub-accounts except the Income sub-account which was almost unchanged. Net private and official capital inflows were, however, insufficient to finance the deficits on the current and capital accounts. As a result, there was a drawdown of US$177 million in the Net International Reserves of the Bank of Jamaica (BOJ).
There was a reduction of US$80 million in the deficit on the merchandise trade largely associated with a decline of US$133 million in imports and a reduction of US$53 million in exports. “The reduction in payments for imports mainly reflected lower expenditure for fuel and raw materials. Consumer and capital goods imports rose. The decline in exports mainly reflected lower earnings from non-traditional exports and sugar. Notwithstanding the overall fall in exports, there were higher earnings from alumina exports for the quarter” the BOJ report states.
Services enjoyed the increased surplus US$65 million, reflecting improvements in travel, transportation and other services. Regarding transportation, there was a decline in freight payments associated with the reduction in imports while the improvement in other services was due principally to reduced payments for insurance services. Within the current transfers sub-account, the increased surplus mainly reflected growth of 4.6 per cent in gross private remittance inflows. There was a marginal increase in the deficit on the income sub-account stemming primarily from a reduction in inflows associated with compensation of employees.
Jamaica’s remittance up sharply
Remittance inflows into Jamaica for June this year marked the fastest increase in any one month so far in 2015 with inflows jumping 11.9 percent for June to end at US$188.4 million, an increase of US$20 million above the inflows of June 2014, Bank of Jamaica remittance report shows.
Net remittances were US$173.3 million, an increase of US$19.7 million or 12.8 per cent over the similar period of 2014. The previous best monthly inflow was a 4.4 percent increase in January with $166 million came into the country. While June was the month with the highest percentage gain the best months for actual inflows are March with $194 million, April $187 and May $190 million.
For the six months to June a total of US$1,093 billion, were received into the system, an increase of US$40.8 million or 3.9 percent while inflows net of outflows amounted to US$985.7 million, a growth of US$38.4 million or 4.1 percent relative to the corresponding period of 2014.
Remittances make up a major part of Jamaica’s foreign exchange inflows with only gross inflows from tourism being better.
Repo rate hiked
Repo rates moved up by 25 basis points to 4 ½ percent in Trinidad & Tobago. At its September 2015 meeting, the Central Bank’s Monetary Policy Committee (MPC) agreed to increase the ‘Repo’ rate for a seventh consecutive time to 4.5 percent.
According to the central bank, the most influential factor behind the MPC’s decision remains the normalization of US monetary policy which could reduce capital flows to many emerging market economies, including Trinidad and Tobago, which is already adjusting to persistently low energy prices. The MPC also judged the domestic monetary policy stance as still very accommodative in the context of a contracting non-energy sector and moderate inflationary pressures.
The central bank last increased repo rates in July by 25 basis points to 4.25 percent, then the bankers stated apart from similar reasons as above that locally, rising inflationary pressures remain a concern for the MPC. Headline inflation held steady at just over 5 ½ percent in June 2015, while core inflation slowed marginally to just below 2 percent. However, the MPC expects inflationary pressures to pick up in the remaining months of 2015 due to a number of factors.
The central bankers stated that domestic inflationary pressures have not materialized as initially expected. On a year-on-year basis to August 2015, headline inflation slowed to 4 percent from just over 5 ½ percent in July 2015. Core inflation was stable at just over 1 ½ percent, while food inflation decelerated to around 8 percent from double-digit territory of 11 ½ percent in July 2015. Although current price pressures seem contained, disruptions to domestic agricultural supply and higher production costs facing select food industries could lead to rising food inflation. Increased consumer spending driven in part by recently concluded public sector wage agreements, as well as robust consumer borrowing, could also push up inflationary pressures.
Food prices push inflation in August
‘Food and Non-Alcoholic Beverages’ recorded the highest movement for the month of 2.1 percent. ‘Vegetables and Starchy Foods’ had the strongest impact on the division moving up by 8.5 percent as drought conditions persisted in the growing areas. The upward overall movement was, however, tempered by declines of 2.3 percent and 0.5 percent in the divisions ‘Housing, Water, Electricity, Gas and Other Fuels’ and ‘Transport’ due to lower petrol prices and reduction in air fares.
Other divisions that recorded increases are: ‘Alcoholic Beverages and Tobacco’ 0.2 percent, ‘Clothing and Footwear’ 0.3 percent, ‘Furnishings, Household Equipment and Routine Household Maintenance’ 0.2 percent, ‘Health’ 0.1 percent, ‘Recreation and Culture’ 0.4 percent, ‘Miscellaneous Goods and Services’ 1.3 percent, while ‘Restaurants and Accommodation Services’ recorded a 0.2 percent increase. ‘Education’ and ‘Communication’ remained unchanged.