- For August 2022, the All-Jamaica Consumer Price Index (CPI) increased by 0.9%. August’s outturn is the highest monthly CPI reading seen thus far in 2022. However, on a year-over-year basis, the August point-to-point inflation figure of 10.2% shows that inflation has remained constant for the past two consecutive months.
- For August, the rise in monthly inflation was largely driven by the 1.7% increase in the index for the heavily weighted ‘Food and Non-Alcoholic Beverages’ division. The main contributor to the increase in the division was a rise in the prices for agricultural produce such as Irish potatoes, carrots, onions, and pumpkins.
- The inflation rate for August 2022 was also impacted by the divisions, ‘Housing, Water, Electricity, Gas and Other Fuels’ and ‘Recreation, Sport and Culture’. The increase in the ‘Housing, Water, Electricity, Gas and Other Fuels’ division of 0.4% was primarily due to higher electricity rates, while higher prices for textbooks due to increased demand ahead of the restart of the school year resulted in a 0.8% rise in the ‘Recreation, Sport and Culture’ division.
- The current point-to-point outturn for inflation is in keeping with expectations, as the BOJ noted that inflation was projected to stabilize in the range of 9.0% to 11.0% for the remainder of 2022.
- The near-term risks to the inflation forecast are assessed to be balanced, which means that actual inflation could continue to be in line with the forecast. On the upside, risks include further disruptions to international supply chains, higher than anticipated pass-through of imported inflation to domestic inflation and a reversal in the trends in commodity prices. On the downside, weaker-than-expected global growth could negatively impact domestic demand. There is also a risk of lower than projected imported inflation from international commodity prices, given the headwinds to global growth.
- On September 29, 2022, the BOJ will have its monetary policy meeting and it is expected that it will continue its hawkish stance. This increase will likely carry the policy at or above 6.25%, from the current rate of 6.00%. This decision will be influenced by the sustained expectation for future breaches in the inflation range and the still elevated inflation expectations for 12 months ahead, which rose to 13.1% in the June Survey from 12.8% in the prior survey.
(Sources: STATIN and NCBCM Research)