Inflation spikes, unemployment dips
Statin releases mixed numbers on various economic variablesThursday, October 21, 2021
The unemployment rate dipped in July, aided by robust recovery growth in the second quarter of this year, but inflation reached 8.2 per cent in September as the price of food, transportation, and utilities rose last month.
The Statistical Institute of Jamaica (Statin) released data yesterday showing the recovery from the COVID-19-induced economic fallout is well underway, but could be threatened by other economic factors, some external to Jamaica.
The data show that the ongoing boom in Construction activities and the related Real Estate and Other Business Services segments of the economy were chiefly responsible for an uptick in the number of employed persons. For July (the survey was carried out between June 20 to 26, 2021), the employed labour force reached just over 1,215,000 — the highest it has been since January 2020, before the onset of the novel coronavirus pandemic. The number of employed persons in July was 93,400 more than the same month a year ago. The unemployment rate, on the other hand, fell to 8.5 per cent from 12.6 per cent last July, but the number of employed people was however still lower than pre-pandemic levels.
“The combined increase in the number of persons employed in the industry groups Construction and Real Estate and other Business Services accounted for over 50 per cent of the increase in the employed labour force. There were 118,300 people employed in the construction industry, an increase of 28.3 per cent,” Carol Coy, director general of the Statin told reporters in a virtual press briefing yesterday.
She added that the Real Estate and Other Business Services Sector accounted for 115,100 employed persons in July — an increase of 23 per cent. The higher employment level was recorded as the economy expanded by 14.2 per cent in the April to June quarter.
Statin however said that performance must be viewed in the context of the 18.4 per cent decline in the same quarter a year earlier, due in part to measures implemented by the Government to control the spread of the novel coronavirus.
As for consumer prices, Statin data show higher costs for food, a hike in taxi fares, and an uptick in the cost of electricity, water and sewerage — pushing the inflation rate for September to 2.3 per cent. That was the highest one month increase in consumer prices in Jamaica since September 2013, when prices rose 2.8 per cent. It follows inflation in August which, at 1.5 per cent, was the highest since September 2014. The result is a point-to-point inflation rate of 8.2 per cent — a rate well above the Bank of Jamaica's target of 4 per cent to 6 per cent.
The central bank has already hiked its key policy rate by 100 basis points to 1.5 per cent in an effort to contain inflationary pressure, but has come under heavy criticism for the move with several economists and business lobby groups calling the move “misguided”, citing the Bank of Jamaica's own commentary that the inflation is transitory — meaning it is temporary.
Damien King, a retired economics lecturer, has however sided with the central bank's move, expressing his opinions on at least two occasions on social media. The central bank has even signalled that it could raise rates further when its Monetary Policy Committee meets in mid-November as it seeks to tame inflation.