Inflation Remains Low in February & Slightly Below Target

• The All-Jamaica Consumer Price Index (CPI) declined by 0.1% for February 2021 contributing to the lowest point-to-point inflation rate (3.8%) since October 2019.
• A 1.3% fall in the index for the heaviest weighted division, ‘Food and Non-Alcoholic Beverages’ was the main driver of the decline in consumer prices. However, increases of 1.4% in the index for the ‘Housing Water, Electricity, Gas and Other Fuels’ division and 0.5% in the index for the ‘Transport’ division tempered the decline in the CPI.
• Electricity rates rose in February due to new tariff rate changes for JPS approved by the Office of Utilities Regulation (OUR). Further, the index for the ‘Transport’ division advanced by 0.5% due to higher petrol prices supported by the vaccine-led recovery in global oil prices
• Consumer prices actually fell for the calendar year-to-February ( -0.1%), while the point-to-point (February 2020 – February 2021) rate was 3.8%, falling just below the lower bounds of the Bank of Jamaica’s (BOJ) inflation rate target of 4%-6%.
• Despite the current low inflation rate and expectations for continued weakness in domestic demand, the BOJ forecasts inflation to average 5.4% this year. This is being driven by expectations for a potential increase in agricultural food prices, higher international commodity prices as the global economy recovers and the effects of the increases in regulated utility prices. 

(Source: Statin)