THE expectation that rate cuts could start in the second half of the year has been boosted after data showed inflation had fallen slightly to 5.3 per cent in April. That is down from 5.6 per cent in March and keeps inflation within the 4 per cent to 6 per cent range the Bank of Jamaica (BOJ) is mandated to target for a third-straight month.

“If it continues along that trajectory, we hope that rates will start to trend down,” Damian Whylie, general manager for asset management at Mayberry Investments Limited, a brokerage, told the Jamaica Observer in an interview about the bonds its Mayberry Jamaican Equities subsidiary now has in the market seeking to raise between $2.2 billion to $3 billion.

Whylie pointed to the recent indication from the governor of the BOJ about the possibility of rate cuts later this year. Inflation in Jamaica has been in the target range of 4 per cent to 6 per cent for five of the last 12 months, including the last two months. In April, a reduction in prices for food, electricity, bus fares, and water and sewage rates was enough to outweigh increases in the prices of alcoholic beverages, household cleaning products, furniture, health care and personal care products such as shampoos, conditioners, haircuts, wigs and hair extensions.

“This downward movement in the Consumer Price Index (CPI) for April was due mainly to a 2.3 per cent decline in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division as a result of lower electricity, water and sewage rates. Also contributing to the fall in the inflation rate was a 0.6 per cent fall in the index for the division ‘Food and Non-Alcoholic Beverages’,” Statin, in its latest CPI bulletin, said.

“The index for the ‘Food’ group declined by 0.7 per cent, while the index for the ‘Non-Alcoholic Beverages’ group rose by 0.4 per cent. The fall in the index for the ’Food’ group was mainly influenced by a 3.7 per cent decline in the index for the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’ due to lower prices for agricultural produce such as carrot, tomato, Irish potato, sweet potato and yellow yam. Average prices were also lower for some items in the classes ‘Ready-made food and other food products n.e.c’ (1.1 per cent) and ‘Fruits and nuts’ (0.6 per cent),” it continued.

President of the Jamaica Agricultural Society (JAS) Lenworth Fulton recently said that in light of the improved rainfall patterns, he is expecting to see a further fall in the price of vegetables as local drought conditions eases and farmers increase their yields.

The central bank after the March inflation released a statement saying it welcomed it as a “positive development” due to the rate being lower than anticipated.

Economist and University of the West Indies lecturer Dr Andre Haughton, in an interview with Caribbean Business Report on Thursday about the inflation out-turn, said he believes prices will generally continue to fall over the foreseeable future.

“The lower inflation we are seeing now is a good thing and comes as a result of much of what we are seeing globally as energy prices come down and more factories reopen, ushering in a normalisation of manufacturing in the COVID-19 aftermath. We have already been through the ‘up’ time so now it’s time for us to go through the ‘down’ time. What we must however do now is to use this downtime to capitalise on this lower inflation position to provide more stabilisation where the domestic economy is concerned,” he stated.

Haughton, however, cautioned that there are risks still lingering that could reverse the trend.

“Jamaica is a small island developing state that is susceptible to any external shock and with global volatilities not yet appeased owing to war and other geopolitical occurrences, we are not yet through the woods and we still have to be weary of what is happening in the global market,” he said.