Consumer Prices Rose 0.5% in July

Consumer Prices rose 0.5% in July according to data released from the Statistical Institute of Jamaica. This follows a 0.3% decline in the index in the previous month. The increase in consumer prices was attributed to higher Food prices as the ‘Food and Non-Alcoholic Beverages’ division rose 1.6%.

Further increases are expected in the upcoming months as chicken prices are set to increase following the droughts in the US, the expected increase in electricity costs and the depreciation in the local currency. Of note, communication cost increased as the special call tax took effect in mid-July. However, the 4.0% decline in the ‘Housing, Water, Electricity, Gas and Other Fuels’ division due to a rebate for the over charge of electricity, moderated the effects of these increases. Point to point inflation was 5.4%, while calendar year to July inflation rate was 3.3%.

Going forward, we expect the pace of inflation to be higher given the expected increase in electricity costs in the month of August and continued depreciation in the local currency. Further, the index for ‘Food and Non-Alcoholic Beverages’ could see some inflationary impulses arising from the increase in chicken prices and other grain-dependent food items. That said, weak demand should temper the overall upward movement in consumer prices.