Inflation Falls But Remains High At 10.2% For July 2022

• For July, the All-Jamaica Consumer Price Index (CPI) increased by 0.7%, relative to the 0.8% increase witnessed in June.  The point-to-point inflation was 10.2% in the 12 months to July 2022, decreasing from the 10.9% reported in June 2022. This keeps inflation outside the BOJ’s target range of 4% to 6%, for the 12th consecutive month.
• For July, the increase in inflation was largely driven by the 1.4% increase in the index for the heavily weighted ‘Food and Non-Alcoholic Beverages’ division. All classes within the ‘Food and Non-Alcoholic Beverages’ division recorded increases with the classes: ‘Vegetables, tubers, plantains, cooking bananas and pulses’ (3.0%), ‘Cereals and cereal products’ (1.7%), ‘Meat and other parts of slaughtered land animals’ (0.8%) and ‘Fish and Seafood’ (0.7%), having the strongest overall impact on the division.
• Also contributing to the upward movement in the CPI for July was an increase of 0.3% in the index for the division ‘Housing, Water, Electricity, Gas and Other Fuels’. This was mainly a result of increased water and sewage rates.
• Other notable divisional increases were recorded in the index for the ‘Transport’ division (0.4%), influenced mainly by higher petrol prices and increased toll rates for the East-West leg of Highway 2000; and in the index for the ‘Personal Care, Social Protection and Miscellaneous Goods and Services’ division (0.8%), due primarily to higher prices for personal care products and services.
• The 12 month point-to-point inflation rate of 10.2% was influenced mainly by the point-to-point price changes for the divisions: ‘Food and Non-Alcoholic Beverages’ (12.6%), ‘Transport’ (15.2%) and ‘Restaurant and Accommodation Services’ (19.1%).
• The current breach in the inflation range is in keeping with expectations, as the BOJ noted in May 2022, that inflation was projected to successively breach the target over the next two years, and is projected to peak within the range of 12.0% and 15.0% by June 2022. Rates will likely remain elevated in the short term despite a steady decline in global food and oil prices.
• Although global commodity and shipping prices are softening, the BOJ will likely administer a further policy rate increase at its next monetary policy meeting on August 18th, 2022 to contain inflation, given that inflation is still widely outside of the target range. The policy rate currently stands at 5.5%.

 (Sources: STATIN and NCBCM Research)