PRICES rose by 1.9 per cent in September. Inflation recorded by the Statistical Institute of Jamaica (Statin) placed price movements for the September quarter at 2.1 per cent. The outturn was slightly higher than the Bank of Jamaica’s (BOJ’s) forecast of one per cent to two per cent.
The central bank expects that generally tight fiscal stance, coupled with overall weak domestic and international demand should constrain price increases for the rest of the fiscal year.
Price movements in housing, water, electricity and gas were the biggest contributor to inflation last month.
Most notably was an 18 per cent rise in the cost of electricity during the period.
Jamaica Public Service Company (JPS) had advised that the average residential customer would return to their usual levels in September.
After customers benefited from a one-off, US$3.8-million ($340-million) fuel rebate from Petrojam, a new heat rate target and lower oil prices last month, the fuel rate has returned to levels seen up to July this year.
The fuel and IPP charge on September bills is $21.881 per kilowatthour (kWh), compared to the charge of $16.748 last month, representing a 31 per cent increase in the rate that covers more than half customers’ bills.
The fuel component of bills dropped in August as a result of the Office of Utilities Regulation setting new heat rate targets, which required the electric company to improve how efficiently it converted fuel to electricity. Failing that, JPS would have to absorb more of the cost of the fuel lost through heat.
The one-off Petrojam rebate was paid in August because the state refinery overcharged independent power supplier Jamaica Private Power Company (JPPC) for purchased fuel.
What’s more, oil prices climbed over the last month, which resulted in higher fuel costs incurred by IPPs and JPS alike.
A 3.1 per cent increase in education cost was the second largest contributor to the September inflation.
“The upward movement in that division was attributable to the commencement of the new academic year in September, normally accompanied by an increase in tuition and other education-related fees,” said Statin.
An approximate 11 per cent upward adjustment in the minimum wage to $5,000 for a 40-hour work week — implemented on September 3 — also pushed up prices.
Despite the sharp rise in prices last month, inflation for the first half of the fiscal year stood at 3.6 per cent.
Not wanting to discount the effects of expected increases in the price of oil and grains, resulting from the impact of severe drought conditions in the US, the BOJ forecasted domestic headline inflation to end up within the range of 10 per cent to 12 per cent for the fiscal year, which runs to next March. The central bank expected the actual outturn to come in closer to the lower bound of the range.