Inflation cooled considerably over the past year in Jamaica, to 5.1 percent to October 2023, data just released by the Statistical Institute of Jamaica (STATIN) shows. The rate is down from 5.9 percent for the period this year to September 2023, and down from 9.9 percent for the October 2022 period.
Statin also stated that inflation for October came in at points 0.8 percent, sharply down from the same period last year at 1.5 percent. October’s inflation is worse than the 0.5 percent that occurred in September this year. But spike in oil prices would have played a big role in October inflation. The fall in oil price to the low $70 levels currently, is signalling that inflation in November is likely going to be moderate with the year to date inflation then heading for the low 4 percent range.
According to the report, inflation in October was driven primarily by the upward movement in the division of ‘Housing, Water, Electricity, Gas and Other Fuels’. The increase in the division’s index was mainly attributed to higher rates for electricity, water and sewage. In addition, ‘Food and Non-Alcoholic Beverages’ also contributed to the increase.
Point to point inflation is now well within the Bank of Jamaica’s mandated target range of 4-6 percent, but the fiscal year numbers which are the basis for their target could be much higher than the figure above. Regardless the central bank runs the risk of driving the economy into recession if they are not careful and move to ease interest rates fast.
Recent data from a large number of listed companies show sluggish revenues growth and lower profit for the September quarter compared with 2022 as well as the first half of 2023, added to this, tourist arrivals slowed considerably in recent months compared to the earlier part of the year and that industry has been the major driver of economic activity this year and added to that the construction sector has been in decline and could worsen.
Unemployment steadies for Jamaica
Jamaica’s unemployment rate was held at 4.5 percent In July 2023, the same as April this year but the number of persons employed rose marginally to 1.3151 million persons up from 1.3126 million in April this year, data from the Statistical Institute of Jamaica (Statin) reports show.
Some 47,000 more persons were employed in July 2023 compared to July 2022 and reflects an 8.5 percent increase over the 43,300 newly employed in April this year.
There was an increase, mostly males, in persons employed in the occupation group ‘Elementary Occupations’, while more females were employed as ‘Service Workers, Shop and Market Sales Workers’ and ‘Clerks’. The industry, with the largest increase in employment was in Real Estate and Other Business Services and ‘Construction.
In July 2023, there were 1,377,300 persons in the Labour Force, an increase of 19,600 or 1.4 percent compared to July 2022. The male labour force increased by 8,400 or 1.2 percent to 734,400 and the female by 11,200 (1.8 percent) to 624,900.
Statin reports that the participation rate was 65.6 per cent, an increase of 0.9 percentage points, which compares favourably worldwide. The participation rate for males is 71.2 percent and females 60.1 percent, for an increase by 0.7 and 1.0 percentage points, respectively.
Jamaica’s labour market has tightened.
For comparison, Investopedia reports that “the World Bank’s most recent data from 2022, shows that the U.S. participation rate falls in the middle of the pack at 62 percent, a few points ahead of the world rate of 60 percent.”
In July 2023, the number of unemployed persons was 62,200, a decrease of 27,500 or a solid 30.7 percent compared to July 2022 and marginally up from 61,300 in April. The number of unemployed males was 24,600, a decrease of 13,000 or 34.6 percent. The number of unemployed females was 37,600, a decrease of 14,500 or 27.8 percent. The number of unemployed youths in the age group of 14 -24 years decreased by 9,000 or26.0 percent to 25,600.
Inflation plunges to 5.9% in past year
Inflation over the past twelve months plunged to 5.9 percent data from the Statistical Institute of Jamaica states. The drop was occasioned by a 0.5 percent rise in inflation for September down sharply from 1.4 percent in September last year. The fall follows a jump in August to 6.8 percent from 6.6 percent to July.
If the rate for September holds or falls in October the twelve month rate will fall below 5 percent.
According to Statin, the main contributor to September’s movement was an 11.8 per cent rise in the index of the ‘Education’ division, due to higher tuition fees for private schools at the primary level. The inflation rate was also impacted by the 0.7 per cent ‘Transport’ division mainly as a result of higher petrol prices. The index for the heavily weighted ‘Food and Non-Alcoholic Beverages’ division went up by 0.1 percent. However, there was a 1.9 per cent decline in the index ‘Vegetables, tubers, plantains, cooking bananas and pulses’ class and this tempered the overall increase of the division.
A 600% plunge in Unemployment in Jamaica
When the Jamaica unemployed fell to the lowest level on record to 4.5 percent in April this year, it was falling precipitously by more than six times from the levels that were at unhealthy and chronically high of 24 to just under 28 percent between 1977 and 1989.
Jamaica’s record low unemployment at 4.5% in April 2023.
The April 2023 outcome is down from 6 percent in April last year and from 6.6 percent in July 2022, while the number of persons employed is at its highest level ever, with the total number of employed persons at 1.313 million in April this year. The highest level of employment before was 1.27 million in January 2020. Knowledgeable persons have expressed their views on the numbers, with one suggesting that Jamaica has always had a low level of unemployment. That is entirely at variance with the facts; see chart.
The country has only experienced rates below 15 percent for a few years, primarily after 2007.
There has also been some focus on the number of hours used to determine whether persons are included in the employed pool. What has not been acknowledged by critics of the low unemployment level is the many businesses finding it more difficult to recruit workers to employ, as well as the need to increase wages to retain those they have. Finding workers going forward is going to be a real challenge and one that will cause companies to look carefully at their operations to see where they can employ cost savings methods to deliver goods and services with minimal dislocations. If the economy continues to expand, it will result in workers coming in from overseas.
When Jamaicans start to pump gas for their vehicles, it will dawn on us that things have changed and that development is only a few years away.
Jamaica’s employment rate has been pushed by the considerable focus on tourism expansion and the advent and rapid expansion in the BPO sector that now employs around 5 percent of the workforce, with the numbers employed said to be over 60,000 and addition a sharp increase in construction activity for residential and commercial demand lifted employment in that area.
Data compiled by ICInsider.com from the Bank of Jamaica, the World Bank and Statin show that unemployment averaged 25.8 percent between 1977-89. The rate fell in 1990 to 19.1 percent and 15.7 percent in 1992 and remained around 15 percent until 2006, then fell to 11.5 percent in 2007 and 11.3 percent in 2008 and 9.9 percent in 2009 before reversing back up to mid-teens up to 2015 and had slowly drifted down since with the exception of 2022 when it climbed to 10.7 following the economic fallout from the Covid19 pandemic.
Jamaica’s unemployment drops to record low
Jamaica’s unemployment rate dropped to the lowest level on record in April 2023, with only 4.5 percent of persons said to be out of work, according to data released today by the Statistical Institute of Jamaica (Statin) and is 1.5 percentage points lower than the 6 percent in April 2022.
There were 1,373,800 persons in the Labour Force, 23,500 or 1.7 percent more than in April 2022, but 43,300 persons gained employment, according to the official government body that collects the data.
The number of persons Outside the Labour Force in April this year was 725,700, a decrease of 20,700 or 2.8 percent compared to 746,400 in April 2022.
Inflation in Jamaica rises in June
Inflation in Jamaica climbed by one percent in June over May, fueled by a spike in food prices, furnishings, household equipment and routine housekeeping and restaurant and accommodation services that rose 4.2 percent.
Inflation for the past two months is slightly higher than the same period in 2022, with June this year being partially pushed by the sharp increase in the minimum wage.
Point to point inflation rose from 6.1 percent in May to 6.3 percent, while the fiscal year inflation to date ended at 1.6 percent to June or 4.8 percent per annum if the current rate were to continue to March 2024.
Inflation rate drops in April
Inflation has finally returned to the band mandated by the Bank of Jamaica of 4 to 6 percent per annum, with the year over year rate now at 5.8 according to data released by the Statistical Institute of Jamaica (Statin.) and is down from 6.2 percent in March.
The dip in the point to point inflation below 6 percent was occasioned by a fall in the All-Jamaica Consumer Price Index (CPI) of 0.4 percent for April 2023 and was influenced mainly by a 4.2 percent fall in the index for the division ‘Housing, Water, Electricity, Gas and Other Fuels’. The movement in the division’s index was due to a reduction in the rates for electricity, which resulted in a 12.5 percent fall in the index for the group. There was also a decline in the index for the ‘Transport’ division, which moved down by 0.1 percent due mainly to reduced petrol and air travel costs. The inflation rate was, however, tempered by a 0.6 percent increase in the index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages.
The inflation rate since November last year is now negative.
Inflation now running at just 2% per annum
The All-Jamaica Consumer Price Index (CPI) increased by a mere 0.1 per cent for March 2023, influenced mainly by a 0.8 per cent increase in the index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages the Statistical Institute of Jamaica (Statin) stated in a release today and comes after a 0.5 percent rise in February and a 0.06 percent decline in January.
According to Statin, “the increase in the index for the ‘Food and Non-Alcoholic Beverages’ division was due to higher prices for agricultural products such as cabbage, Irish potato and sweet potato which contributed to the 2.5 per cent increase in the index for the class Vegetables, tubers, plantains, cooking bananas and pulses. “
“The rise in the CPI was also influenced by the 1.1 per cent increase in the index for the division ‘Restaurants and Accommodation Services’ resulting from higher prices for meals consumed away from home. The inflation rate was, however, tempered by a 1.8 per cent fall in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division and a 0.2 per cent decline in that of the ‘Transport’ division. The movement in the former division was due to lower electricity, water and sewage rates, while lower petrol prices impacted the latter division.”
The point-to-point inflation rate (March 2022 – March 2023) was 6.2 percent just outside BOJ’s upper mandate level.
This was influenced mainly by the point-to-point inflation rate for the divisions: ‘Food and Non-Alcoholic Beverages’ (10.1%) and Restaurants and Accommodations Services’ (16.9%). These upward movements were, however, tempered by a 1.9 per cent decline in the index for the group ‘Housing, Water, Electricity, Gas and Other Fuels,“ Statin stated.
Inflation has been declining from the latter part of 2021, with the rate since March last year running at an average of 0.416 percent per month and 4.99 percent cumulative. Since November last year, the average monthly inflation has been running at 0.17 percent or just over 2 percent per annum, an urgent signal to the Bank of Jamaica that the time has passed for a serious cut in interest rates.
Inflation moderating fast in Jamaica
Inflation in Jamaica continues to moderate according to the latest report on the All-Jamaica Consumer Price Index released this week by the Statistical Institute of Jamaica (STATIN) showing that the point-to-point inflation rate as of February 2023 was 7.8 percent, this compares with 8.1 percent reported to January, this year.
The rate of inflation over the first two months of the year is 0.2 percent, in line with the average for the last four months and is now running at 45 percent below the average of 0.37 percent for the four months to February last year. Factors that could lower the pace, even more, are the recent revaluation of the Jamaica dollar and prices for some goods that are declining as new inventory items cost falls compared to the stock of goods in 2022 and most importantly the recent fall in the price of oil.
The CPI increased by 0.5 percent for February 2023 the release stated, up from a modest decline in January. The latest “increase was mainly influenced by a 2.7 percent increase in the index for the division Housing, Water, Electricity, Gas and Other Fuels. The increase in the index for the division Housing, Water, Electricity, Gas and Other Fuels was impacted by higher electricity rates which resulted in a 7.4 percent rise in the index for the group Electricity, Gas and Other Fuels. There was a negligible decline in the heavily weighted Food and Non-Alcoholic Beverages division as prices continued to fall for items within the class Vegetables, tubers, plantains, cooking bananas and pulses, by 2.4 percent. This was however at a slower rate when compared to the (-5.8%) that was recorded for the previous month, January 2023”.
No inflation in December
There was no inflation in Jamaica in December, according to data from the Statistical Institute of Jamaica. Not only was there no inflation on an overall basis, but prices also fell marginally, with the price index slipping from 128 in November to 127.9 in December.
According to Statin, the outcome emanated from a 1 percent decline in the index for the heaviest weighted division, Food and Non-Alcoholic Beverages and a 0.9 percent fall for the Transport division. The fall in food prices was due to lower prices for carrots, tomatoes, cabbage and lettuce, being the main contributors to the 6.3 percent decrease in the index for the class Vegetables, tubers, plantains, cooking bananas and pulses. The fall in the transport index resulted mainly from lower petrol cost. There were increases in the index for the divisions; Restaurants and Accommodation Services by 3.4 percent, impacted mainly by increased prices for meals consumed away from home, and Housing, Water, Electricity, Gas and Other Fuels that was up 0.7 percent, due mainly to increases in the rates for electricity, water and sewage.
For December 2022, the point-to-point inflation rate was 9.4 percent compared to the 10.3 percent that was recorded for November and 8.8 percent for 2022, marginally down from 9.1 percent for the 2021 calendar year.