Bank of Jamaica (BOJ) Governor, Richard Byles, says the near-term rate of inflation is expected to range from four to six per cent, which is within the BOJ’s target.
Speaking at the Central Bank’s digital quarterly press briefing on August 26, Mr. Byles said a five to six per cent out-turn is projected for the July to September 2020 quarter, four to five per cent for the October to December 2020 quarter, and five to six per cent for the January to March 2021 quarter.
“This near-term inflation forecast is largely being influenced by a deceleration in agriculture and processed food price inflation, and higher imported inflation,” he told journalists.
Imported inflation is a general price increase resulting from heightened costs of imports. These include materials, products or services used by companies.
Mr. Byles said the outlook for higher imported inflation largely results from the BOJ’s projection for higher oil prices, noting that this should contribute to increased domestic energy and transport-related prices.
He pointed out that the projection of a slow-down in the pace of increase in food prices mainly relates to the expected normalisation in supply conditions, following the early onset of drought conditions at the start of the year.
“In addition to these factors, there could be some adjustment in regulated prices, which could affect inflation in the near-term. Over the next two years, inflation is projected to remain in the four to six per cent band,” the Governor added.
The Governor indicated that the inflation rate for the 12-month period ending July 2020, as measured by the Statistical Institute of Jamaica (STATIN), was 5.7 per cent.
Mr. Byles said the out-turn reflects the impact of higher food prices, mainly agricultural commodities.
He further pointed out that price increases not influenced by agricultural food and fuel prices have been trending upwards in recent months to 4.2 per cent for the 12-month period to July 2020, adding that this is consistent with the Bank’s accommodative monetary policy stance.
“Moreover, the out-turn for July reflects increased prices for health services, personal care goods, and some processed food items, consequent on higher demand for these goods and services,” Mr. Byles said.