CPI Falls for the 2nd Consecutive Month in 2026

  • Consumer prices continued to ease in February with the All-Jamaica Consumer Price Index (CPI) falling by 0.9%, according to data released by the Statistical Institute of Jamaica (STATIN). This marks a second consecutive monthly decline, following the supply-side shock caused by Hurricane Melissa.
  • With the faster than expected rebound in supplies of key agricultural produce, the 'Food and Non-Alcoholic Beverages' division, which fell by 2.5%, continued to be the main contributor to the decline. An 11.3% fall in the index for the class, 'Vegetables, tubers, plantains, cooking bananas, and pulses' was the primary driver, attributable to increased supply of agricultural produce, including cabbage, carrot, cucumber, sweet pepper, and tomato on the local market.
  • The overall movement in the CPI was moderated by a 0.2% increase in the 'Housing, Water, Electricity, Gas and Other Fuels' division, due to higher electricity rates, as well as a 0.2% rise in the 'Transport' division, reflecting higher petrol prices.
  • As such, the annual point-to-point (P2P) inflation rate for February 2025 to February 2026 stood at 3.9%, unchanged from the 3.9% reading in January and down from a post-Hurricane Melissa peak of 4.5% in 2025.
  • Two consecutive monthly CPI declines suggest that the inflationary impact of Hurricane Melissa is proving more temporary than initially anticipated. This is owed in large part to the swift response of the Ministry of Agriculture in restoring agricultural production in the storm's aftermath. This was reflected in the Bank of Jamaica’s (BOJ's) 25 basis points rate cut announcement on February 23, 2026, which was made possible by a faster-than-anticipated recovery in agricultural supplies and mild exchange rate appreciation.
  • Inflation is projected to return to the 4.0–6.0% target range by end-2026. However, the BOJ flagged upside risks, including increased domestic spending amid post-hurricane reconstruction efforts and the government's temporary suspension of the fiscal rule, which could place upward pressure on prices over the near term.
  • Moreover, since the BOJ’s rate reduction, new risks have emerged from the external environment that could push inflation outside the BOJ target range. The U.S.-Israel war on Iran has pushed oil prices to their highest level. On March 9, Brent Crude Oil hit an intraday high of US$119.50 since Q1 2022, despite the International Energy Agency member countries authorising a record release of oil reserves1. The war has also caused a spike in fertiliser prices following reduced traffic through the Strait of Hormuz, which is responsible for 20% of global oil supplies and a third of fertiliser.
  • Ultimately, the evolution of inflation this year will weigh heavily on the duration of the conflict and whether it spreads to other parts of the region. With the higher upside risks to inflation, we anticipate that the BOJ is likely to take a wait-and-see approach and hold its policy rate at 5.50% at its next meeting scheduled for March 31st.

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1The IEA member countries have authorised the release of 400 million barrels of oil, the largest coordinated release in history, to stabilise markets following the conflict.

(Sources: JIS, Bank of Jamaica & NCBCM Research)