Inflation Dips Further, Falling Closer to the Lower Bound of BOJ’s Target Range

  • Jamaica’s point-to-point (P2P) inflation fell at 4.4% in February 2025, according to data released by STATIN.  This is a reduction from the 4.7% P2P reading in January 2025 – bringing local inflation closer to the lower end of the Bank of Jamaica’s (BOJ) 4.0%-6.0% target range.
  • The lower P2P can be attributed to a slower rise in the cost of ‘Electricity, Gas and Other Fuels’ (2.3%), which countered higher price increases from ‘Imputed Rentals for Housing’ (+5.1%).
  • Meanwhile, the ‘Food and Non-Alcoholic Beverages’ (+6.5%) and ‘Restaurants and Accommodation Services’ (+6.2%) divisions increased at faster rates. The increase in the ‘Food and Non-Alcoholic Beverages’ division was mainly due to a 19.2% rise in the ‘Fruits and Nuts’ class and a 9.4% increase in the ‘Vegetables, tubers, plantains, cooking bananas and pulses’ class. The ‘Restaurants and Accommodation Services’ division was primarily impacted by a 6.1% increase in ‘Food and Beverage Serving Services’, amid higher costs of meals away from home.
  • On a month-on-month basis, prices indicated by the All-Jamaica Consumer Price Index (CPI1) for February decreased by 0.9% relative to January reflecting a 2.0% fall in the ‘Food and Non-Alcoholic Beverages’ division and a 0.2% decrease in the ‘Housing, Water, Electricity, Gas and Other Fuels’ division.
  • STATIN’s latest CPI readings reinforce the Bank of Jamaica’s (BOJ’s) expectation that inflation will remain within its target range of 4%-6% over the next eight quarters. During its policy meeting on February 20, 2025, the BOJ concluded that the current policy rate of 6.00% remains appropriate to keep inflation within the target range and ensure stability in the foreign exchange market.
  • However, the Trump administration’s tariffs – which triggered retaliatory measures from its key trade partners – and its immigration clampdown risk disrupting global trade and causing labour shortages in the US. These outcomes pose risks to the inflation outlooks in Jamaica and other emerging markets.
  • The next decision will be made on March 27, when we expect the BOJ to maintain its rate, given the uncertainty that lies ahead, especially given policy uncertainty in the US.

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1The Consumer Price Index (CPI) measures changes in the general level of prices for consumer goods and services purchased by private households.

 

(Source: STATIN, NCBCM Research)