Jamaica’s inflation rate climbed further above the Bank of Jamaica’s (BOJ) target range in August, reaching 7.9 per cent, as higher food, transport and fuel-related costs continued to squeeze household budgets.

The Statistical Institute of Jamaica (Statin) reported Tuesday that the Consumer Price Index rose 0.6 per cent in August, driven mainly by a 1.5 per cent increase in the cost of food and non-alcoholic beverages. Higher prices for Irish potato, sweet potato, cabbage, tomato, and pumpkin helped push the food index up 1.6 per cent during the month.

Transport costs also increased 0.7 per cent, reflecting higher petrol prices and toll rates. That increase was partly offset by a 0.7 per cent decline in housing, water, electricity, gas and other fuels, largely due to lower electricity rates.

The 7.9 per cent point-to-point inflation rate for August, up from 7.5 per cent in July, leaves inflation well above the central bank’s 4.0 to 6.0 per cent target range. Food and non-alcoholic beverages rose 10.2 per cent over the 12 months, while transport costs jumped 14.6 per cent. Housing and related costs increased 4.8 per cent.

The latest out-turn also means inflation has accelerated for a third-consecutive month, having moved from 6.7 per cent in June to 7.5 per cent in July and now 7.9 per cent in August. BOJ had already warned that inflation would remain above target over the September quarter as higher international commodity prices, transport costs and agricultural prices work through the economy.

Food prices remain one of the biggest pressure points.

The central bank said in August that worsening drought and heat conditions were contributing to higher agricultural inflation, while elevated international fuel prices were also feeding into transport and other costs. It has warned that higher energy and transport expenses could generate further second-round increases across goods and services.

Those pressures have also been visible in local markets. Recent Jamaica Observer checks at Coronation Market found sharply higher prices for several vegetables, including lettuce, tomato, sweet pepper, and pumpkin, with drought conditions cited as a major factor.

Despite the latest acceleration, BOJ has so far kept its policy rate unchanged at 5.50 per cent, arguing that some of the current pressures are temporary while maintaining that inflation should gradually move back towards target over the near term.

The next monetary policy decision is due on September 28, when the latest 7.9 per cent reading is expected to feature prominently in the central bank’s assessment of inflation risks.

— Karena Bennett