Inflation Expected To Raise Risks To Social Stability In Jamaica In The Months Ahead

• Fitch Solutions expects that elevated global commodity prices will fuel high inflation in Jamaica in the coming months, raising the risk of public unrest. At the end of 2021, inflation in Jamaica was already trending up, averaging 7.9% y-o-y in Q421; however, the Russian invasion of Ukraine  has caused a sharp increase in commodity prices, which has exacerbated the inflationary pressures facing the country. 
• It is forecasted that inflation will average 11.4% in 2022, after headline inflation rose 11.3% y-o-y in March, with food, electricity and transport prices rising 14.7%, 9.6% and 14.3%, respectively. 
• Rising inflation has led Fitch to revise Jamaica’s score for the Short-Term Political Risk Index (STPRI), to reflect the higher risk of instability in the months ahead. 
• Persistently high fuel, food and electricity prices will raise the prospect of protests in the coming months, particularly from organized civil society groups such as transportation and agricultural unions. As a result, it  has reduced Jamaica’s score in the ‘social stability’ sub-component of its STPRI to 45.0 out of 100 from 55.0 previously. This has brought down the country’s overall STPRI score to 69.2 out of 100, from 71.7 previously, putting it basically inline with the Caribbean average of 69.3.

(Source: Fitch Solutions)