JAMAICA’S inflation rate dropped to 5 per cent in 2024, the lowest annual reading since 2018, when it stood at 2.4 per cent, according to a report published Wednesday by the Statistical Institute of Jamaica (Statin).

The rate retreated from 6.9 per cent in 2023 and a 10-year peak of 9.4 per cent in 2022, as the Bank of Jamaica maintained price gains within its 4-6 per cent target range. Yet while inflation has moderated compared to previous years, rising costs in essential goods like food and housing remain the main pressure points for households in 2024.

Food prices rose 8.1 per cent in December from a year earlier, driven by higher costs for fruits, vegetables, and pulses. Items such as bananas, tomatoes and plantains saw particularly sharp increases in 2024. Housing-related expenses also increased, influenced by higher rental costs and electricity rates.

The ‘Restaurants and Accommodation Services’ division saw a 4 per cent increase in prices over the year ending December 2024. This rise was primarily driven by higher costs for meals purchased from fast food outlets, street vendors, and cookshops. Transport costs eased due to lower petrol prices, providing some relief to overall inflationary pressures. Other categories, including health services, restaurants, and personal care products, experienced moderate price increases over the year.

The Bank of Jamaica expects inflation to remain within its target range of 4­-6 per cent over the next two years, with occasional temporary dips below 4 per cent during some months in 2024 and 2025, according to minutes from its December Monetary Policy Committee meeting. These dips are attributed to lower transport-related costs and agricultural prices. Reflecting this outlook, the central bank revised its inflation forecast for the two-year period starting November 2024 downward to an average of 5.0 per cent, compared to the previous projection of 6.4 per cent. The revision reflects easing demand pressures, reduced inflation expectations, and a slower pace of currency depreciation. While the outlook remains optimistic, the breaches below the lower end of the target are expected to be brief, with inflation generally anchored within the target range over the medium term.

Still, the central bank warns that its fight to maintain price increases within its mandated range could be challenged in the coming months. It cited reduced global inventory, geopolitical tensions, and US-China trade uncertainties as factors that could drive grain prices above projections.

Domestic agricultural disruptions also threaten price stability, it noted, with crop production recovery delayed until March 2025 due to Hurricane Beryl and Tropical Storm Rafael. This delay has already fuelled higher-than-expected inflationary pressures in the December 2024 quarter.

In addition, it pointed out that potential changes in US economic policies may exert upward pressure on domestic inflation. The MPC emphasised the importance of maintaining foreign exchange market stability to anchor inflation expectations amidst these risks.