Finance and Planning Minister Dr Omar Davies says financial experts “all got it wrong” in their predictions that the administration would not be able to keep inflation at the 9.5 per cent projected.

Making his 14th consecutive contribution to the budget debate at Gordon House in Kingston yesterday, the finance minister said inflation was in fact one of the “most positive achievements” of the 2006 calendar year and the 2006/07 fiscal year, as there was a sharp reduction compared to the last two years.

“They all got it wrong in terms of inflation,” Davies said, noting that with inflation at 5.8 per cent for the calendar year and 6.6 per cent for the fiscal year it was lower than the 9.5 per cent that the Government had originally projected.

“The truth is we built the programme for 2006/07 around a projected inflation of 9.5 per cent and we came in at 5.8 per cent for the calendar year,” Davies said. This figure compares with 12.9 per cent for 2005.

“A major factor impacting on this sharp reduction was the recovery in agriculture,” said Davies.

He said given the extent to which domestic food plays a role in the basket of goods and services, the recovery in agriculture was the major factor in bringing inflation down and the relative stability in international oil prices.

Davies said the reduction in inflation rates also impacted positively on the negotiations for a second Memorandum of Understanding between the Government and trade unions representing public sector workers, and the rates of interest on government paper which declined from 13.18 per cent at the end of March last year to 11.64 per cent at the end of March this year.

In February, governor of the Bank of Jamaica (BOJ) Derick Latibeaudiere at his Quarterly Press Briefing said the ability to contain inflation has proven to be one of the bright spots of the Jamaican economy. The BOJ governor said inflation for 2006 was therefore the lowest for a calendar year since 1981.