Point-to-point inflation in Jamaica has bent back close to the Bank of Jamaica’s target of 4-6 percent based on the February 2024 data released by the Statistical Institute of Jamaica, with a reading of 6.2 percent following monthly inflation plunging by 0.6 percent for the month and follows a fall of 0.10 percent in January.
The decline was influenced by the decreases in the index for the divisions ‘Food and Non Alcoholic Beverages’ (1.1 percent) and ‘Housing, Water, Electricity, Gas and Other Fuels’ (1.6 percent).
Negative inflation in February
Inflation in Jamaica now running under 5%
Inflation in Jamaica continues to decline and running well within the Bank of Jamaica target of 4 to 6 percent since the latter part of 2021, with inflation since October at 5.3 percent and 4.6 percent per annum since November last year.
In the next few months, inflation looks set to dip even more with commodity prices falling sharply with the price of fuel which is now under US$90 per barrel, set to send inflation locally down sharply.
As measured by the Consumer Price Index, Inflation increased by 0.7 percent for July 2022, the Statistical Institute of Jamaica (STATIN) reported this week, bringing inflation since July last year to 10.2 percent, the government agency stated. The July 2022 inflation comes in well under the 1.7 percent increase in July 2021 but in line with the Inflation for June last year of 0.7 percent.
This increase for July, Statin states, was due mainly to a 1.4 percent increase in the index for the heavily weighted ‘Food and Non-Alcoholic Beverages’ division, with ‘Vegetables, tubers, plantains, cooking bananas and pulses’ rising 3 percent, ‘Cereals and cereal products’ up 1.7 percent, ‘Meat and other parts of slaughtered land animals’ increasing 0.8 percent and ‘Fish and Seafood’ up 0.7 percent.
Inflation in July was impacted by one off increase in toll rates on the two toll roads.
Bank of Jamaica inflation response worsened
Inflation in Jamaica is getting better, not worse, contrary to the recent statement by the Bank of Jamaica, to the contrary in justifying a steep hike in overnight deposit interest rates by 1.5 percent to 4 percent starting on Monday.
Yes, the point to point inflation rate moved up to 9.7 percent, giving the impression that inflation is getting out of hand, but that number does not tell the true story. The 4 percent interest rate will help savers get a more realistic rate on their savings.
The bank really had no significant new information that they did have when rates were raised between September and December, last year. If anything, the new information indicates clearly that inflation is moderating not worsening.
What are the facts? In January and February, last year inflation was negative 1.6 and 0.1 percent respectively and jumped to 1.1 percent in March while slipping to 0.5 percent in April, for a negative year to date inflation then, of 1.1 percent. Between May and September when BOJ moved rates up by 100 basis points inflation was the worse for the year at 1.32 percent per month or annualized 16 percent that is well up from 0.48 percent per month or 5.76 percent. The high rate of inflation suggests the bank should have moved earlier to raise rates than in September.
Inflation since the first interest rate move in September, is running at 0.6 percent per month or 7.2 percent per annum just slightly above the BOJ range of 4-6 percent. The average for the last three months is running at an average of 0.47 percent or 5.64 percent annualized, well below the 16 percent per annum for the period indicated above.
Negative inflation in January 2021 was due to a steep decline in the prices of vegetables and tubers a development that was not sustainable, as such the underlying inflation was more likely positive than negative as such the 0.6 percent increase in January this year is not out of line and is better than the December rate of 0.8 percent. The question to be answered is what can justify a sharp interest rate increase to tame much more moderate inflation over the past three months compared to when the rates were initially raised in September and on two other occasions last year by much smaller amounts that that starting on Monday?
March inflation in Jamaica jumps sharply
Prices in the category of Housing, Water, Electricity, Gas and Other Fuels as measured by division the Statistical Institute of Jamaica (STATIN) surged sharply by in March 13.1 percent and the category of Electricity, Gas and Other Fuels’ jumped 8.6 percent to help send inflation for March to the highest increase for 2020 to date.
The major items of the increase were tempered by the decline of 1.8 percent in the index for the group ‘Water Supply and Miscellaneous Services Related to the Dwelling.’
According to Statin, the All Jamaica Consumer Price Index recorded an increase of 1.1 percent for March this year. The increase was due primarily to the upward movements in the index for the groups, ‘Actual Housing Rentals and Electricity, Gas and Other Fuels’, with the Housing, Water, Electricity, Gas and Other Fuels’ division increasing by an average of 4.6 percent for the overall inflation the index.
“The index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages’ rose by 0.2 per cent, while the index for the ‘Transport’ division advanced by 0.5 per cent”, Statin advised.
For the review period, the calendar year-to-date inflation rate is negative 0.6 percent, with January having negative inflation of 1.6 percent and February 0.1 percent, while the fiscal year ending in March, the inflation rate was 4.4 percent and the rate for the past twelve months is 5.2 percent.
Jamaica’s Inflation stays low
Inflation in Jamaica for the first five months of 2020 remained extremely low, with the rate for May, coming in at 0.1 percent following April’s increase of just 0.2 percent, leading the year-to-date inflation rate at negative 0.4 percent.
Inflation over the past twelve months came out at 4.2 percent, with the period between July and November rising by exactly 4.2 percent, mostly due to a hike in the exchange rate of the Jamaican dollar versus the US dollar.
The May movement resulted mainly from a 1.1 percent increase in the heavily weighted Food and Non-Alcoholic Beverages division, according to a release from the Statistical Institute of Jamaica due to higher prices for agricultural produce, with a 2.3 percent rise. The division of Housing, Water, Electricity, Gas and Other Fuels increased 1.5 percent due mainly to electricity rates, which resulted in a 5.6 percent upward movement in the index for the group.
The index for the Education division fell 22.1 percent, primarily due to a decrease in tuition fees for the summer term and the Transport division index fell 0.3 percent, with lower prices for petrol contributed to this decline.
Jamaica’s inflation slows in August
Jamaica’s Inflation rate slipped to 0.8 percent in August from 0.9 percent in August 2018 and lower than the 1.1 percent recorded in July this year according to data released by the Statistical Institute of Jamaica.
The major contributors to the latest inflation data were food and non-alcoholic beverages, increasing 0.9 percent and Housing, Water, Electricity, Gas and other Fuels that climbed 1.7 percent due to higher electricity rates. The Transport sector rose 0.3 percent mainly due to higher prices for petrol and air travel.
For the year to date, inflation is up 3.3 percent and 2.6 percent for the fiscal year to date. The 2019 inflation rate is slightly ahead of the 2018 rates with the 2018 year to date inflation at 1.6 percent to August and the fiscal year to date 1.9 percent. Inflation for the last 12 months to August this year is 4.1 percent versus 3.9 percent for the same period in 2018.
The consumer price index measures the price level of consumer goods and purchases, and services from private individuals or households.