Inflation Rate Back on Track: 5.7% in September

  • After the spike in August, consumer prices moderated in September with 12-month point-to-point (P2P) inflation coming within BOJ’s 4.0.0% to 6% target range at 5.7%.
  • Despite this lower turnout relative to August, prices in the most volatile divisions have increased on average. The ‘Food and Non-Alcoholic Beverages’ rose 6.9%, ‘Transport’ was 9.1% higher and ‘Housing, Water, Electricity, Gas and Other Fuels Divisions was up 3.6%.
  • Meanwhile, the month-over-month inflation rate decreased to 0.2%, with the All-Jamaica Consumer Price Index (CPI) falling from 140.7 in August to 140.5. A 4.0% drop in the 'Housing, Water, Electricity, Gas, and Other Fuels' category. Reduced electricity rate was the main driver of the moderation in prices month over month. In September, the Jamaica Public Service (JPS) announced a 34% reduction in the Fuel Charge component of customers’ bills. The  Fuel Charge component is a significant part of electricity bills.
  • Additionally, a 0.3% decrease in the 'Transport' division, linked to lower petrol prices, also contributed to the overall reduction in inflation for the month.
  • However, the decline was somewhat offset by a 0.7% increase in the index for the 'Food and Non-Alcoholic Beverages' division and a 5.8% rise in the 'Education' division. The increase in the 'Food and Non-Alcoholic Beverages' division reflects an increase in the prices of a range of produce, including some vegetables, roots and tubers. For the ‘Education’ division, the upward movement was attributed to higher tuition fees for private schools at the primary level.
  • In the 'Education' division, the increase was largely due to rising tuition fees for private primary schools.
  • The Bank of Jamaica’s (BOJ’s) latest Monetary Policy Committee (MPC) communication emphasised that current economic conditions are favourable for sustaining low, stable, and predictable inflation going forward which could pave the way for further rate cuts. This viewpoint remains unchanged, despite preliminary estimates suggesting a significant slowdown in Q2 GDP and the expected contraction in Q3, given the damage from Hurricane Beryl.

(Source: STATIN & NCBCM Research)