KINGSTON, Jamaica— Adult passengers of the Jamaica Urban Transit Company (JUTC) will see their bus fare slashed by 30 per cent from the current $100 to $70 as of January 1, 2024.

At the same time, students will see their bus fare reduced by $5 from $30 come January 1, while pensioners will see their fare rolled back from $40 to $30 at the start of the new year.

Minister of Finance, Dr Nigel Clarke, who made the announcement in the House of Representatives on Tuesday, said the intervention by the Government, which essentially amounts to an additional subsidy for the state-owned bus company, is aimed at curtailing the anticipated increase in inflation as a result of the 19 per cent increase in fares granted to public transport operators last month.

A further 16 per cent increase for bus and taxi operators will take effect next April, and Clarke also addressed that fact. He said: “Further, effective April 1, 2024, a further reduction in the regular (JUTC) fare from $70 to $50 (for adults) and …for children from $25 to $20…”

The temporary measure is to remain in place until December 2025 and, Clarke said the anticipation is that it “will have a mitigating impact on the private bus and taxi fare increases on the commuting public”.

He told the House that for January to March of the current fiscal year, the cost of the subsidy will be $200 million and for the full year, April 1, 2024 to March 31, 2025, the cost to taxpayers will be $800 million.

Clarke explained that the BOJ intends to maintain the sharp reduction in the 12-month point-to-point inflation rate from a high of 11.8 per cent in April 2022 to 5.1 per cent in October 2023. This, he noted, was a “convergence of inflation back to the target range”.

He shared that he was told by the BOJ that “as a result of the adjustment in public passenger vehicle fares, they are expecting a reversal of the downward trend in annual inflation starting in November, unless there are countervailing measures”.

He pointed out that given that the cost of transportation services comprises a notable portion of the Consumer Price Index (CPI) basket, the BOJ further advised that the announced increases in PPV fares cumulatively could add approximately two percentage points to inflation if not balanced by countervailing measures.

The finance minister said the 19 per cent increase that took effect in October will result in a significant spike in the CPI, leading to a monthly inflation rate for November of between one per cent and 1.5 per cent which in turn will increase the 12-month point-to-point inflation outturn as compared with the October result.

Clarke said the government was mindful of the effect of the fare increase on the cost of living, and also the need to support the BOJ in its efforts to return and keep inflation within the four per cent to six per cent range.