Inflation Remains High at 10.9% for 12 months to June 2022

  • For the month of June, the All-Jamaica Consumer Price Index (CPI) increased by 0.8%. June’s outturn means the monthly CPI has increased further relative to the 0.3% increase witnessed in May. The point-to-point inflation was however stable at 10.9% in the 12 months to June 2022, relative to the May 2022 outturn. This keeps inflation outside the BOJ’s target range of 4% to 6% for the 11th consecutive month.
  • For June, this upward movement was impacted primarily by a 1.7% increase in the index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages’ and a 0.9% upward movement in the index for the ‘Transport’ division. The overall movement of the CPI was tempered by the 0.5% decline in the index for the division ‘Housing, Water, Electricity, Gas, Other Fuels’. The decline in the index was influenced by the assistance provided by the government to low and middle income households with 20% of their bill payments.
  • The point-to-point inflation rate was mainly influenced by divisions: ‘Food and Non-Alcoholic Beverages’ (13.7%), ‘Transport’ (15.6%) and ‘Restaurants and Accommodation Services’ (22.4%). For the fiscal year-to-date (April 2022- June 2022), the inflation rate was 1.1%.
  • The current breach in the inflation range is in keeping with expectations, as the BOJ noted in June 2022, that inflation was projected to successively breach the target over the next two years. Further, while it had projected in May that the rate would likely peak within the range of 12.0% and 15.0% by June 2022, in June it revised its outlook to note that it was possible that inflation would fall below the peak range, which it has.
  • While the rate will remain elevated in the short term, it is anticipated that it will decline in the second half of the year as global food prices have been falling as reported by the FAO, and other commodity prices such as oil are expected to fall.
  • On August 18th, 2022, the BOJ will have its next monetary policy meeting at which further policy rate increases will be discussed. The policy rate currently stands at 5.5%, which was made effective on 30 June 2022. Given that the BOJ has noted that the interest rate is closer to the level that it deems appropriate, there may be smaller and less hikes in the future.

(Sources: STATIN & NCBCM Research