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Projected inflation for the fiscal year ending March 31 has been lowered to reflect the results of a tightening of monetary policy, reduction in the price of oil and some agricultural products, among other measures.
Governor of the Bank of Jamaica (BoJ), Derick Latibeaudiere, speaking at the quarterly media briefing at the BoJ auditorium in downtown Kingston on Wednesday (Feb. 18), pointed out that the inflationary figure for the fiscal year had been revised to range between 12.5 per cent and 13.5 per cent, down from the Bank’s earlier forecast of between 14 per cent and 16 per cent.
The revised figure, he explained, was consequent on the “lower than anticipated” outturn for the December quarter, which recorded zero per cent inflation, as per the Consumer Price Index (CPI), and the 1.5 per cent to 2.5 per cent projection for the March quarter.
Mr. Latibeaudiere said the sharp drop in the December quarter, relative to the 4.7 per cent recorded in the September period, occurred against the background of tightened monetary conditions, a reversal in international commodity prices, deceleration in the prices of some domestic agriculture commodities, and lower domestic demands, adding that the out-turn, was “well below the five previous December quarters.”
“Specifically, the decline … reflected deceleration in the prices of starchy foods and sharp declines in the cost of utilities and transportation. The latter was related to a 69.1 per cent reduction in the price of international crude oil over the September and December quarters,” the Governor outlined.
In the meantime, inflation for the 2008 calendar year was 16.8 per cent, similar to that for 2007, while for the fiscal year up to December, the figure stood at 11 per cent compared to 14 per cent for the corresponding 2007/08 period.
Mr. Latibeaudiere pointed out that while January recorded an inflation out-turn of -0.3 per cent, the overall figure for the March quarter was projected to range between 1.5 per cent and 2.5 per cent.
“We are still expecting some lagged effect from the recent depreciation in the (foreign) exchange rate. We also anticipate that there will some impact from the renewal of annual contracts for various services. The impact of these increases are expected to be partly mitigated by the continued moderation in domestic food prices, the lagged effects of declining international commodity prices, and a general reduction in demand,” he informed.