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  • The impact of drought conditions on the prices of agricultural produce should be reversed by year-end.
  • This is according to Bank of Jamaica (BoJ) Governor, Brian Wynter, who was addressing the BoJ’s quarterly media briefing held on August 25 at the Bank’s downtown Kingston offices.
  • Mr. Wynter said the effect of the current drought became evident in the data for the month of July, when prices went up by 1.4 per cent, and brought the annual inflation rate to nine per cent.

The impact of drought conditions on the prices of agricultural produce should be reversed by year-end.

This is according to Bank of Jamaica (BoJ) Governor, Brian Wynter, who was addressing the BoJ’s quarterly media briefing held on August 25 at the Bank’s downtown Kingston offices.

“This view is underpinned by the assessment that most of the crops that were affected by the drought were short-term, and as replanting resumes when the weather normalises, agricultural prices will go back down,” he stated.

Mr. Wynter said the effect of the current drought became evident in the data for the month of July, when prices went up by 1.4 per cent, and brought the annual inflation rate to nine per cent.

Mr. Wynter said that despite this uptick, “12-month inflation is expected to remain within the target range of 7.0 per cent to 9.0 per cent for the September 2014 quarter, possibly staying in the upper end of the range in August.”

The Bank’s inflation outlook for the full fiscal year remains in the target range of 7.0 per cent to 9.0 per cent.

“Our inflation forecast is also underpinned by assumptions of higher oil prices in light of geopolitical tensions, and some pass-through of exchange rate depreciation. On the other hand, continued declines in international grains prices, due to favourable weather conditions in producing countries, as well as continued weakness in domestic demand, are expected to have a downward effect on inflation,” he said.

The Governor said the aim is to keep inflation in the six per eight per cent range over the next two years, and between two and four per cent for the longer term, in line with the main trading partners.

He said the recently announced increase in bus fares could push inflation towards the upper bound of the target range, although the impact would be temporary. Also, an increase in the tariff rate for electricity as requested by the Jamaica Public Service would add a further inflationary impulse.