Inflation Moves Outside BOJ’s Target; Second Consecutive Month of Increase for the CPI

The average price paid for goods and services by Jamaican consumers rose in December, as reflected by a 0.5% increase in the All-Jamaica Consumer Price Index (CPI). The upward movements in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division (2.5%), as a result of higher prices for rent, electricity, water and sewage rates, was the main driver of the increase.
Increases in the index for the classes ‘Ready-made food and other products n.e.c’ (4.2%) and ‘Fruit and nuts’ (1.8%) resulted in an increase of 0.3% in the index for the ‘Food and Non-Alcoholic Beverages’ division, which also contributed to higher inflation during the month.
However, the overall inflation rate for December 2023 was tempered by a fall of 0.4% in the index for the ‘Transport’ division, given lower fuel prices.
The point-to-point inflation rate (December 2022 – December 2023) was 6.9%. This was influenced mainly by the point-to-point inflation rate for the divisions: ‘Food and Non-Alcoholic Beverages’ (8.7%), ‘Transport’ (10.6%), and ‘Restaurants and Accommodation services’ (9.4%). For the fiscal year-to-date, the inflation rate was 7.3%, while the Calendar year–to-date in December 2023 was 7.5%.
At its December 20, 2023 meeting, the BOJ kept the monetary policy at 7.00% as it continued to monitor the pass-through effects of previous adjustments on deposit and loan rates. The next policy decision will be on the 20^th of February, where it is expected that BOJ will maintain its policy rate at 7.00%.
Despite the recent spikes in the inflation figure over the last two months, we expect that inflation will find a stable downward trend over the next few months as its key drivers, such as international commodity prices and shipping costs, continue to decline.

(Source: STATIN)