The inflation rate to August based on the consumer price index rose by 0.4 percent over July 2016, bringing the year to date inflation to 0.3 percent. With just 4 more months to go for the completion of the year and with the price of oil on the world market declining, Jamaica seems set to enjoy one of the lowest inflation for 2016, in decades.
The calendar year-to-date inflation is only 0.3 percent, while the year over year movement is 1.8 percent. IC Insider is forecasting the full year inflation to end just below 1.5 percent, barring major negative developments. If the forecast is closely achieved, it would be the lowest rate in four and a half decades and will better the 3.66 percent achieved in 2015, the previous lowest rate over the same period. The rate for 2016 would be well below the 4.2 percent forecast by the IMF for the calendar year and the Bank of Jamaica the fiscal year forecast to March 2017 with a target of 4.5 percent to 6.5 percent.
According to Statin, inflation for August was driven mainly by the division ‘Housing, Water, Electricity Gas and Other Fuels’ which recorded the highest movement, 1.8 percent, primarily due to the increase in rates for electricity and water. The group ‘Food and Non-Alcoholic Beverages’ division increased by 0.4 percent and was influenced by the upward movement in the group ‘Vegetables and Starchy Foods’ up by 0.9 percent. The increases were partially offset by a fall in ‘Transport’ by 0.2 percent, due to lower petrol prices on the local market for the month of August.
The low level of inflation comes against the back ground of a 5 percent devaluation of the Jamaican dollar versus the US dollar and a tax package earlier in the year that saw an increase in the price of petroleum as well as a fiscal deficit that is close to zero and well below forecast.