THE new tax package is expected to push up prices by 3.4 per cent this fiscal year.

According to the Bank of Jamaica, revenue measures to be implemented over the course of the year, including a broadening of the GCT tax base, will result in a sharp rise in prices this month.

“Most of the increase is expected in the June quarter with inflation projected to be in the range of three per cent to five per cent,” said central bank governor Brian Wynter.

The inflation rate will fall dramatically in subsequent quarters and reach one to two per cent over the first three months in 2013, he said.

Most of the direct impact of the new tax policies — which is projected to add 2.9 percentage points to inflation — is expected to come from food and non-alcoholic beverages, recreation and culture, and restaurant and accommodation services.

The effect of increased GCT on electricity on produced goods and services is expected to add 0.5 percentage points to inflation this year.

Overall, the inflation for the fiscal year that runs to March 2013, is projected to be in the range of 10 per cent to 12 per cent, up from initial estimates of six per cent to eight per cent.