DISRUPTIONS to global oil supply linked to the war involving Iran are now filtering into Jamaica’s economy, driving up electricity and petrol costs and pushing inflation higher in March.

The All-Jamaica Consumer Price Index rose by 0.3 per cent during the month, reversing declines recorded in January and February, as higher energy costs fed into household expenses, according to data released Wednesday by the Statistical Institute of Jamaica (Statin).

The increase was driven largely by a 2.3 per cent rise in the index for housing, water, electricity, gas and other fuels, reflecting a sharp 5.1 per cent increase in electricity costs. Transport costs also rose by 0.6 per cent, mainly due to higher petrol prices.

The movements come against the backdrop of heightened volatility in global oil markets, where the ongoing conflict involving Iran has disrupted shipments through the Strait of Hormuz — a critical route that carries roughly one-fifth of the world’s oil supply — tightening availability and pushing prices higher.

For Jamaica, which relies heavily on imported fuel for electricity generation and transportation, the impact is immediate. Higher global oil prices feed directly into local fuel costs and electricity tariffs, amplifying pressure on households and businesses.

The impact is also being managed through weekly fuel price adjustments, typically capped at $4.50 per litre to limit sharp swings. Energy Minister Daryl Vaz said Wednesday the Government is assessing whether those limits remain viable as global oil prices surge, but has not yet made a decision, raising the risk of steeper increases ahead.

The Government is also examining broader measures to manage the impact of rising oil prices, including the possibility of policies aimed at reducing fuel consumption. Minister Daryl Vaz indicated that COVID-era style restrictions on movement could be considered if global price pressures intensify, highlighting the scale of the challenge facing policymakers as external shocks feed into the domestic economy.

Fuel prices announced Wednesday showed only marginal easing, with gasolene and diesel declining by about $0.25 per litre, offering little immediate relief to consumers after a series of increases in recent weeks. The modest adjustments point to continued pressure in global oil markets, with Government-imposed limits still smoothing price movements that might otherwise be sharper.

The recent movements follow a sustained surge in fuel prices over the past several weeks. Prices rose by as much as 20 per cent since the start of the year, driven by a series of weekly increases of around $4.50 during March that added just over $21 to pump prices in little more than a month, as global oil markets reacted to tensions in the Middle East.

The March increase in consumer prices would have been higher were it not for a decline in food costs, which helped to moderate the overall movement. The index for food and non-alcoholic beverages fell by 0.6 per cent, driven by a 4.9 per cent decline in vegetables and other agricultural produce, including tomato, cabbage, carrot and Irish potato.

Despite that monthly relief, food prices remain elevated on an annual basis, with the division rising 5.6 per cent over the 12 months to March, making it one of the largest contributors to inflation alongside housing-related costs.

Point-to-point inflation — which measures the rate over a 12-month period — stood at 4.3 per cent in March, up from 3.9 per cent in the previous two months, signalling a firming in price pressures after earlier easing.

Beyond energy and food, the data also showed signs of broader cost increases across the economy. The index for insurance and financial services rose sharply by 5.3 per cent during the month, reflecting higher motor vehicle insurance premiums, while health costs increased by 0.5 per cent and communication costs by 0.8 per cent.

The pattern points to early signs of second-round effects, where increases in fuel and electricity costs begin to filter into other goods and services.

While price increases remain moderate, the shift back to energy-driven inflation presents a more difficult challenge for policymakers. Unlike food prices, which can fluctuate with domestic supply conditions, energy costs are largely determined by global markets and geopolitical developments.

With tensions in the Middle East continuing to disrupt oil flows and keep prices elevated, the risk is that higher energy costs will continue to feed through the economy in the months ahead, placing renewed pressure on the cost of living.