Higher rates for passenger transport services pushed inflation to a 10-month high at 6.9 per cent for the year spanning December 2022 to December 2023. This is the highest inflation has been measured in Jamaica since February 2023 when the Statistical Institute of Jamaica (Statin) said it was 7.8 per cent.

The point-to-point inflation rate is outside of the Bank of Jamaica’s (BOJ) target range of four to six per cent. It also solidifies concerns raised by the BOJ during the final quarter of 2023 when the central bank took the decision to keep the policy interest rate steady at 7 per cent, despite inflation settling down within the prescribed range for the months of September and October.

In the last two discussion notes from the Monetary Policy Committee meetings, the BOJ has held firm on its stance to hold policy interest rate steady, citing concerns of a rise in inflation above the bank’s target range for much of the period between the December 2023 and March 2025 quarters, primarily due to the continued impact of the increases in selected PPV fares.

At the time, the central bank warned that the announced increases in taxi fares, cumulatively, would add approximately two percentage points to inflation, given that the cost of transportation services’ significant weight on the Consumer Price Index or CPI basket.

A countervailing measure later taken by the Government to temporarily reduce JUTC public passenger fares effective January 1, 2024, is forecast to bring annual inflation closer to 5.9 per cent during this period. The impact of that reduction will not be fully known until mid-February when inflation data for January is published.

“The All-Jamaica CPI point-to-point inflation for the period December 2022 to December 2023 was 6.9 per cent. This was 0.6 percentage points higher than the 6.3 per cent for the period ending November 2023. The divisions that contributed significantly to this were ‘Food and Non-Alcoholic Beverages’ [8.7 per cent], ‘Transport’ [10.6 per cent] and ‘Restaurants and Accommodation Services’ [9.4 per cent],” the State agency said in its report.

The report said the increase in the index for the ‘Transport’ division was mainly impacted by the group ‘Passenger transport services’ which rose by 16.5 per cent largely due to a 16.6 per cent rise in the index for ‘Passenger transport by road’.

Meanwhile, all classes within the ‘Food and Non-Alcoholic Beverages’ division increased on a year-on-year basis, but the class ‘vegetables, tubers, plantains, cooking bananas and pulses’ had the strongest impact with an increase of 17.5 per cent in its index. The increase in the segment was directly related to higher prices for agricultural produce such as sweet potato, yam, Irish potato, tomato, carrot, and cabbage, Statin said.

It added that the index ‘Restaurants and Accommodation Services’ also contributed to the uptick in inflation data. The index rose by 9.4 per cent for the review period, mainly influenced by a similar 9.4 per cent increase in the index of the group ‘Food and Beverage Serving Services’ due to increased prices for meals consumed away from home.

Amid the upward trend in annual inflation for the country, the Statin reported that inflation also increased by 0.5 per cent for month of December 2023.

“The main contributor was a 2.5 per cent increase in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division, largely influenced by higher costs for rent, electricity, water and sewage,” it said.

Also contributing to the monthly inflation rate was a 0.3 per cent increase in the index for the ‘Food and Non-Alcoholic Beverages’ division due primarily to increases in the classes, ‘Ready-made food and other food products n.e.c’, up 4.2 per cent and ‘fruit and nuts’, up 1.8 per cent.

The inflation rate for December 2023 was, however, tempered by a 0.4 per cent decline in the index for the ‘Transport’ division due to lower fuel prices.