Inflation has a particularly pernicious impact on most Jamaicans working hard to get by and the aim is to shield them as best as possible with sound monetary policies.

Of concern is that the year 2024 has began with inflation above the Bank of Jamaica’s (BOJ) target which is somewhere in between 4 to 6 per cent.

Only last week, STATIN revealed that headline inflation at January was 7.4 per cent, higher than the preceding three months.

This signals there may be trouble ahead particularly at a time when wages are on the rise. The mission remains to tame inflation.

Speaking at the quarterly monetary policy press conference held earlier today (February 21) at the BOJ’s Nethersole Place headquarters in downtown Kingston, Governor Richard Byles said: “In the wake of the announcement by the Minister of Finance of the temporary two-phase reduction in JUTC fares, we had estimated that the announced measure would have had a material impact on tempering the inflationary pressures of the PPV fare increases.

“Inflation was consequently projected to generally remain within the target range, except for December 2023 and a few months in 2024. Upon review, the BOJ now recognises that it had overestimated the impact of the reductions in JUTC fares. The two-phase reduction is now estimated to have an offsetting impact of only 0.2 percentage points on annual inflation, with the first reduction already evident in the CPI data for January 2024.”

Governor Byles drew attention to the situation where the higher than targeted headline inflation at January continued to largely reflect the impact of the increase in the PPV fares as well as the effect of wage increases throughout the economy.

The recent heavy rains have added to these inflationary woes pushing up agricultural food prices.

The BOJ’s Monetary Policy Committee met last week and was made aware that inflation is projected to remain above the BOJ’s arget range until June 2025. There is still the second phase of the PPV fare increase to come (April 2024).

“Whilst some key drivers of headline inflation, such as inflation expectations and the exchange rate, have remained generally stable and grains prices have declined and are projected to continue to fall, the risks to the inflation outlook remain elevated.

Geopolitical tensions cannot be discounted. The war between Russia and Ukraine goes on with Russia recently taking complete control of the Ukrainian town of Avdiivka in Donetsk. The Russians now hold 18 per cent of Ukrainian territory with Putin looking to plant the Russian flag in all the eastern regions of Luhansk and Donetsk.

While that wage rages in Europe, the Israel Defence Force (IDF) is preparing to move into Rafah with more than 1.6 million people displaced in Gaza and more than 30,000 Palestinians killed in Gaza. We are living in a time with two major world conflicts which will have an impact on Jamaica the longer they go on.

Governor Byles pointed out today, “While shipping prices and oil prices have remained below their peak, they have recently risen amid ongoing geopolitical tensions and supply chain disruptions. The factors that could lead to lower-than-projected inflation include weaker-than-projected global growth, which could reduce domestic demand and imported inflation, resulting in lower rates of price change.”

In an effort to temper inflation the Monetary Policy Committee has kept the interest rate at seven per cent and maintained a stable foreign exchange market, but as a precautionary measure has tightened Jamaican dollar liquidity conditions.