Point-to-Point Inflation Breaks Downward Trend; Inches up to 6.1% in May 2023  

  • For May 2023, the All-Jamaica Consumer Price Index (CPI) increased by 0.6% when compared to the previous month. Similarly, the point-to-point inflation rate for May 2022 – May 2023 inched up to 6.1%, indicating that inflation has accelerated over the last month.
  • The upward movement in May was influenced mainly by increases in the index for the divisions ‘Housing, Water, Electricity, Gas and Other Fuels’ (1.8%) and ‘Food and Non-Alcoholic Beverages’ (0.7%). The inflation rate was however tempered by a decline of 0.3% in the index for the ‘Transport’ division, due to lower petrol prices.
  • The increase in the ‘Housing, Water, Electricity Gas and Other Fuels’ division’s index was due largely to higher rates for electricity but was tempered by a decline in the index of the group ‘Water Supply and Miscellaneous Services' due to lower water and sewage rates.
  • For the ‘Food and Non-Alcoholic Beverages’ division, the index for the group ‘Food’ rose by 0.7% and the group ‘Non-Alcoholic Beverages’ increased by 0.8%. Increases were registered in the index for all classes within the group ‘Food’, with the largest contributor ‘Vegetables, tubers, plantains, cooking bananas and pulses’, moving upwards by 1.3% due to higher prices for products such as yam, lettuce, pumpkin and carrot.
  • The point-to-point inflation rate (May 2022 – May 2023) was 6.1%. This was influenced mainly by the point-to-point inflation rate for the divisions: ‘Food and Non-Alcoholic Beverages’ (10.7%) and ‘Restaurants and Accommodation Services’ (8.6%). Tempering these increases, however, was the decline of 0.7% in the index for the ‘Transport’ division, as well as a fall of 2.3% in the index for the ‘Information and Communication’ division.
  • Within the division ‘Food and Non-Alcoholic Beverages’, the index for the group ‘Food’ rose by 10.6%. The main class contributing to this movement was ‘Vegetables, tubers, plantains, cooking bananas and pulses’, which increased by 19.7%. The upward movement in the index for the ‘Restaurant and Accommodation Services’ division was primarily due to an 8.6% increase in the index for the group ‘Food and Beverage Serving Services’. This increase was due to higher prices for meals consumed away from home.
  • Moderating these increases was the fall in the index for the ‘Transport’ division which resulted from lower cost for fuels, with the index for the class ‘Fuel & lubricants for personal transport equipment’ decreasing by 8.9%.
  • On May 19, 2023, the BOJ had its monetary policy meeting, where it deemed it appropriate to maintain the policy rate at 7.00% and watch the pass-through effects on deposit and loan rates. With the point-to-point inflation projected to return within the BOJ’s target range of 4.0% to 6.0% by the December quarter, we anticipate that the BOJ will maintain its policy at its next monetary policy meeting on June 29, 2023. This is in a bid to continue to watch the pass-through effects of the previous rate hikes.

(Source: STATIN)