Inflation drops as food prices fall
JAMAICA’s inflation fell 0.9 per cent in February, marking the second consecutive month of deflation as food and utility costs declined, the Statistical Institute of Jamaica (Statin) reported Monday.
The decline was “mainly attributed to a 2.0 per cent fall in the index for the ‘Food and Non-Alcoholic Beverages’ division,” according to Statin.
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Agricultural produce prices led the decrease, with the “Vegetables, Tubers, Plantains, Cooking bananas and Pulses” category falling 8.8 per cent due to lower prices for items including cabbage, carrot, escallion, sweet pepper, tomato and yam.
Household budgets also benefited from a 0.2 per cent decline in the “Housing, Water, Electricity, Gas and Other Fuels” division, primarily due to a 1 per cent reduction in electricity rates. This decrease was partially offset by a 2 per cent increase in home maintenance costs — as fees charged by carpenters, masons, painters, plumbers and electricians went up — and a 1 per cent rise in water and sewage rates. Meanwhile, the “Information and Communication” division recorded the largest sectoral decrease of 5.9 per cent due to downward adjustments in telecommunication service rates.
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February’s deflation follows a 0.3 per cent price decline in January, bringing the point-to-point inflation rate to 4.4 per cent compared to 4.7 per cent in January, and well below the 7.4 per cent recorded in January 2024.
The data come as the Bank of Jamaica’s monetary policy committee (MPC) prepares to meet on March 25-26, with a decision on the policy interest rate expected March 27, shortly after the U.S. Federal Reserve announces its own monetary policy decision this week. The Fed is widely expected to hold rates steady at its meeting this week as US inflation has remained stubbornly above target, potentially delaying Jamaica’s own monetary easing path.
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The Bank of Jamaica has maintained its policy rate at 6 per cent since its last meeting in February, when it noted in meeting minutes that “the domestic macroeconomic environment” was “positive” and inflation appeared “anchored” within its 4 per cent to 6 per cent target range.
Still, it said there are triggers that risk inflation rising again. The central bank also flagged potential economic policy changes in the United States as a key risk factor that “could have adverse implications for the global and domestic economies.”
“The Committee agreed that it would be prepared to adjust the stance of monetary policy if risks crystallise and result in an upward deviation from the inflation target,” the MPC stated in minutes from its February 18-19, 2025 meeting released earlier this month.
In those minutes, the BOJ revealed it has revised down its projection for Fed rate cuts, now anticipating “that the Fed will cut rates by 100 basis points (bps) during 2025, which is less than the 150 bps previously forecast”.
The upcoming Federal Reserve decision takes on added significance for Jamaica’s monetary policy outlook, as the Bank of Jamaica has historically maintained its policy rate above the U.S. to prevent capital outflows.
Despite recent monthly decreases, most economic sectors continue to show higher prices compared to a year ago, with food prices up 6.5 per cent, education costs rising 8.9 per cent year-over-year and the price of restaurant meals went up 6.2 per cent.
