• British consumer confidence rose in May to its highest in nearly two-and-a-half years, helped by households' optimism about their personal finances, according to a survey conducted before Prime Minister Rishi Sunak's election announcement.
• Friday's Growth from Knowledge (GfK) Consumer Confidence Index rose in May by two points to -17, its highest reading since December 2021. A Reuters poll of economists had pointed to a reading of -18.
• The survey, which has been running since 1974 and is not adjusted for seasonal variations, has a strong tendency to rise each May. Nonetheless, the improvement will be welcomed by Sunak as he tries to tempt voters back to his Conservatives ahead of a national election on July 4.
• Four out of five of the survey's components measuring economic and personal financial confidence rose this month. Only the major purchase index declined. "All in all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come," Joe Staton, client strategy director at GfK, said.
• Inflation fell to its lowest rate since mid-2021 at 2.3% in April, although the drop was smaller than economists had expected. April also brought a nearly 10% increase in Britain's minimum wage as well as a 2-percentage point cut in the rate of national insurance contributions paid by employees.
• "With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis," Staton said. GfK conducted its survey of 2,009 people between May 1 and May 15.

(Source: Reuters)

• At its meetings on 16 and 17 May 2024, the Bank of Jamaica’s Monetary Policy Committee (MPC) decided to keep its policy rate at 7%^[1].  This marks over a year since the policy was initially raised to 7.0%, and comes after two consecutive months of decline in the point-to-point inflation rate.
• Jamaica's headline inflation in April 2024 was 5.3%, meeting the Bank's target of 4.0% to 6.0%. This rate was 0.3 percentage points lower than March 2024 and below the Bank's forecast, attributed to a faster-than-expected slowdown in agricultural food inflation. Core inflation, excluding food and fuel prices, was 5.7%, slightly down from March.
• Key drivers of headline inflation, including international grain prices and inflation expectations, have decreased. However, international oil prices have risen. Inflation in Jamaica's main trading partners' economies has continued to moderate, although at a slower pace than projected.
• Inflation is expected to temporarily exceed the upper end of the target range by the end of the June 2024 quarter, driven by seasonal increases in agricultural food prices, normalization of electricity rates, and rising transportation costs due to higher international oil prices.
• Following this period, inflation is projected to return to the target range and maintain stability over the next eight quarters, except for occasional breaches in 2025, primarily attributed to agricultural price adjustments that are not anticipated to repeat.
• The inflation outlook is lower than the Bank's prior forecast primarily because of the Government’s postponement of the second increase in public passenger vehicle fares slated for April 2024. Additionally, reduced international grain prices led to downward revisions in processed food and dining-out costs. However, this decline is partially counteracted by the inclusion of a planned increase in the national minimum wage and heightened inflation in energy and transportation due to rising international oil prices.
• Although inflation is moderating, it remains outside the target range, with future risks leaning towards upward pressure on prices. Core inflation remains elevated at the upper end of the target range, and there are concerns about wage-related pressures and inflation expectations driving inflation higher. Larger-than-expected regulated price adjustments and external factors like higher international oil prices and adverse weather conditions could further elevate inflation.
• The MPC noted that future monetary policy decisions will depend on incoming data related to the risks to inflation stated above. Its next decision will be on June 28, 2024.

(Source: BOJ)

^[1] The rate offered to deposit-taking institutions on overnight placements.

• Lumber Depot Limited (LUMBER) has announced that it has acquired a 35% interest in Atlantic Hardware & Plumbing Company Limited (“Atlantic”).
• Atlantic is a 30-year-old Jamaican company engaged in wholesaling and distributing hardware, building materials, plumbing, electrical, tools, and supplies to hardware stores, contractors, and developers across Jamaica.  The business is located at 7a Ashenheim Road, Kingston 11, and is led by Managing Director Deanall Barnes, an experienced business leader in the trading and distribution of building materials.
• Of note, there will be no change to the business strategy of Atlantic, as it will continue to operate as a dedicated hardware wholesaler and distributor.
• The majority shareholder of Atlantic is Construct Group Limited, a private investment company with expertise in the hardware business as well as general business management. LUMBER will be represented on the Board of Directors of Atlantic by its Managing Director, Major Noel Dawes along with two other directors.
• The acquisition cost totalled $210Mn and was funded internally. Lumber will account for this transaction as of May 1, 2024, the start of its financial year. The acquisition forms part of the company’s strategy for growth and to increase shareholders’ value. It also comes after the company announced in October that it was in negotiations to acquire businesses in the same line of operations.

(Source: JSE)

• Barbados and China have signed the implementation agreement that will allow for the construction of a new 20,000-seat National Stadium at Waterford, St Michael, in two and a half years.
• The agreement, which was recently signed at the Ministry of Youth, Sports and Community Empowerment, at Haggatt Hall, St. Michael, by Acting Permanent Secretary, Joy Adamson, and China’s Economic and Commercial Counsellor, Liang Jie, outlines the process for the construction phase.
• Minister of Youth, Sports and Community Empowerment, Charles Griffith, thanked the Chinese Government for its assistance and briefly explained the process for the redevelopment of the new stadium.
• “The project will commence with the demolition of the current structure. The exact timeline will be provided by the Chinese partners as they complete their internal processes to identify a suitable construction company. The first phase of the project will revolve around the demolition of the existing structure,” Griffith said.
• In his remarks, Mr Jie expressed pleasure at being present to sign the implementation agreement for the project, and he thanked the Ministry of Youth, Sports and Community Empowerment and other government departments for their efforts in promoting the grant project.
• He also highlighted the longstanding friendship and partnerships between China and Barbados. “Barbados has been and continues to be a good friend and good partner of China in the Caribbean. Since the establishment of diplomatic relations between China and Barbados 47 years ago, the two countries have continuously enhanced political mutual trust, promoted the Belt and Road Initiative, and carried out fruitful cooperation in various areas, setting an example of mutual respect, equality, mutual benefit, and common development between countries of different sizes.”

(Source: Loop Barbados News)

• Mexico's headline inflation likely ticked up in the first half of May for the third consecutive fortnight, a Reuters poll showed on Monday, May 20. The uptick is fueling bets the Bank of Mexico will hold its key interest rate steady at its next monetary policy meeting.
• The median forecast of 10 analysts projects annual headline inflation of 4.79% for the first half of May, slightly up from 4.67% in the second half of April.
• "We believe that the price of some agricultural products may continue to put pressure," said Humberto Calzada, chief economist at the Rankia Latin America firm, citing adverse climate conditions.
• Meanwhile, the closely watched core index, viewed as a more useful measure of consumer price trends because it strips out some volatile energy and food prices, is seen at 4.31% in annual terms, its lowest level since May 2021.
• Mexico's central bank held its benchmark interest rate steady at 11.0% earlier in May in a unanimous decision, as inflation remained above its target range.
• Bank of Mexico governor Victoria Rodriguez said last week the bank's five-member board will discuss the possibility of resuming interest rate cuts at the upcoming June 27 monetary policy meeting. Nonetheless, deputy governor Irene Espinosa said days later she did not expect a rate cut at the next meeting.

(Source: Reuters)

• Canada's annual inflation rate slowed to a three-year low of 2.7% in April, and core measures continued to ease, data showed on Tuesday, prompting money markets to see an increased chance of an interest rate cut in June.
• Analysts polled by Reuters had forecast inflation to cool to 2.7% from 2.9% in March. Month on month, the consumer price index rose 0.5% in April, also less than a forecast of a 0.6% gain.
• The April inflation figures are critical for Bank of Canada Governor Tiff Macklem, who has repeatedly said he would like to see more evidence that prices are easing before deciding on when to start cutting rates.
• "Canadian central bankers should have the evidence they need to begin easing monetary policy," Royce Mendes, head of macro strategy for Desjardins Group, wrote in a note, adding that he was expecting the first rate cut to happen in June.
• After the data's release, money markets increased their bets for a rate cut on June 5 to almost 55% from 39% earlier.
• The BoC has cranked up interest rates by 475 basis points from March 2022 until last July and since then has held them steady at a near 23-year high of 5.0%. This has helped ease the rate of increase in prices from a high of 8.1% seen two years ago, but the final lap to reach the BoC's 2.0% inflation target has been difficult, especially due to shelter costs, wage pressures, and food prices.

(Source: Reuters)

• U.S. households continued to feel pinched by inflation in late 2023 even as price pressures ebbed, the Federal Reserve reported on Tuesday, with most Americans saying their financial situation had changed little in the last year, while parents reported times had gotten harder.
• The Fed's annual survey on household economics and decision-making showed that about 72% of adults were doing at least okay financially as of October 2023. That was down from 78% in 2021 and the lowest rate since 2016, though little changed from 73% in 2022. The share of parents doing at least okay financially dropped 5 percentage points to 64%, the lowest level since 2015, when data collection began.
• Inflation remained the top financial concern, as 65% of adults said high prices had made their situations worse, even though consumer inflation fell sharply from around 9% in June 2022 to below 4% by the time the survey was taken. Additionally, while 34% said their family's monthly income had risen in the past year, 38% said their spending had also increased. Some 63% percent of adults said they could cover a hypothetical $400 emergency expense using cash or its equivalent, the same as in 2022 but down from a record high of 68% in 2021.
• Covering rental housing costs was a greater challenge last year than the previous year, with 19% of renters saying they had been behind in the rent at some point in the prior year, up from 17% in 2022. Rental costs, which have proven to be among the reasons inflation has not eased as much as Fed policymakers had hoped, were up far more than inflation overall, with the median monthly rent rising 10% to $1,100, the survey said.
• The survey included responses from 11,000 people and was conducted in October of 2023. It was the latest in an array of pulse-takings of U.S. consumers to show a generalized gloom hanging over Americans' view of the economy and their own financial well-being even as growth has exceeded expectations and the job market remains strong.
• Monthly surveys from other organizations like the Conference Board and the University of Michigan have shown a persistent pessimism that began about three years ago alongside the arrival of the highest inflation since the 1980s.

(Source: Reuters)

• Jamaica’s total spending on imports for January to December 2023 was valued at US$7,592.1Mn, while earnings from total exports were valued at US$2,001.8Mn as reported by the Statistical Institute of Jamaica (STATIN). 
• For the twelve months, the value of imports fell by 1.8% when compared to the US$7,731.2Mn spent in 2022. This decrease was largely impacted by lower spending on imports of “Raw Materials/Intermediate Goods” and “Fuels and Lubricants”, which declined by 4.6% and 14.6%, respectively.
• The lower imports of “Raw Materials/Intermediate Goods” were driven by lower expenditure on ‘Industrial Supplies’, ‘Construction Materials’ and ‘Food (incl. Beverages) Mainly for Industries’. The decline in expenditure on imports for 2023 came after consecutive years of increases from 2020 to 2022.
• However, revenues from exports for 2023 increased by 5.3% compared to US$1,901.4Mn earned in 2022. This performance is a continuation of the trend since 2020. The increase in exports for 2023 was due primarily to a 77.6% increase in the exports of “Crude Materials (excl. Fuels)”.
• Domestic exports increased to US$1.521.9Mn, 11.3% above the US$1,367.4Mn for 2022. Consequently, the trade deficit at the end of 2023 decreased by 4.1% to US$5,590.3Mn when compared to US$5,829.8Mn in 2022.
• The five main trading partners for 2023 were the United States of America (USA), China, Brazil, Japan and Colombia. Expenditure on imports from these countries fell by 2.0% to US$ 4,628.6Mn in 2022. This was due largely to lower imports of “Mineral Fuels”.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, Latvia, the Russian Federation, and Iceland. Export revenues from these countries increased by 1.2% to US$1,347.9Mn due to higher exports of Alumina.

 (Source: STATIN)

• Finance Minister Dr. Nigel Clarke says the Tax Administration of Jamaica (TAJ) is working to bring in the outstanding corporate income taxes owed by firms for the last fiscal year.
• The category was short $14Bn based on the tax projections for the 2023/2024 fiscal year, affecting the country's fiscal surplus target. In May, Dr. Clarke highlighted that tax revenues for the 2023/ 2024 fiscal year fell short by $24.8Bn
• Speaking with Radio Jamaica News, Dr. Clarke said that further investigations will be done on the factors leading to the outstanding payments. 
• "These entities are identified. We know what they have declared and TAJ will be following up with them pretty assuredly to ensure that they pay over, but also to inquire why they did not pay in March. All of that information and data is useful. And I have to see what the results of that exercise is before making any definitive steps," he said.
• Based on Jamaica's Income Tax Act, unpaid sums owed to the government will also accumulate interest from the day after it is due.
• However, it is uncertain when these outstanding taxes will be collected. "I can't impose an artificial deadline, but I'll be meeting with them at least weekly until we sort of resolve this overhang and, you know, really get to handle as to what the causes are and we're able to estimate what the yield from that overhang will be in this fiscal year." Dr. Clarke added.

 (Source: RJR News & NCBCM Research)

• Venezuela continues to build up military infrastructure and hardware close to the border with Guyana as President Nicolas Maduro and his supporters scale up their threats to annex an oil-rich piece of Guyanese land.
• In a report shared with CNN, the Washington-based think tank Center for Strategic and International Studies (CSIS) warns that while the Venezuelan government “has little to gain and much to lose from a full-blown conflict” it continues to play “a dangerous game” over its claim over the densely forested Essequibo region.
• “The constant drumbeat asserting ‘the Essequibo is ours,’ alongside the creation of new military commands and legal structures to oversee the defence of the region, is helping to institutionalise a sense of perpetual prewar footing,” it wrote.
• There has been speculation that the upcoming Venezuelan elections at the end of July have given Maduro the motivation to escalate against Guyana, using it as a way to distract from his record: Millions of people have fled the country due to poor economic conditions, food shortages and limited access to health care.
• CSIS argues that instead of tamping down the aggression after the vote, “Maduro may be tempted to ramp up both rhetoric and action related to the Essequibo in a true gambit to manufacture a regional crisis in the aftermath of a stolen election.”
• It may not be in Maduro’s interest to “initiate a full-blown conflict with neighbour Guyana, but his escalatory rhetoric tethers his political reputation and legitimacy to his willingness to back his words with force”, especially with his key internal ally, the armed forces, CSIS writes. “Thus, one of the most concerning possibilities is that Maduro will fall victim to his own rhetoric. He has whipped up nationalist passions without providing an escape valve.”

(Source: CNN)