Cost of living in Jamaica among highest in Latam region
Published:Friday | September 9, 2022 | 12:09 AM
Jamaica recorded the ninth-highest 12-month rise in cost of living in the region at June this year, according to data from a regional United Nations economic body.
The inflation rate, at 10.9 per cent over the 12 months to June, ranks ninth among 33 nations in the Latin America and Caribbean region, according to the Economic Survey of Latin America and the Caribbean 2022, published late August by the Economic Commission for Latin America and the Caribbean, or ECLAC. And the region can expect more uncertainty going forward, according to the report, which measured consumer price index, or CPI, changes over the periods December 2020 to December 2021 and June 2021 to June 2022.
“Future inflation patterns in the region are closely linked to global inflation, as their determinants are very similar. For that reason, if the effects of the invasion of Ukraine on prices for raw materials persist, in particular for energy and food, inflation will remain high,” ECLAC said.
Venezuela had the highest inflation levels at 157 per cent, followed by Argentina at 65 per cent and Suriname at 55 per cent. Jamaica’s inflation rate ranks as the third- highest in the Caribbean subregion, behind Haiti at 29.2 per cent and Cuba at 28.9 per cent. Jamaica’s inflation rate at June this year was the highest level of price rise in the English-speaking Caribbean.
The ECLAC report noted that inflation has affected the majority of countries in the region, with 29 posting increases. Only three economies – Venezuela, Cuba and St Kitts-Nevis – recorded lower inflation. In the case of Venezuela, inflation, although still high, fell off from the astronomical levels of 2,507.9 per cent in June last year and 2,959 in December 2020.
“Inflation has affected the majority of countries in the region, with 29 posting increases by December 2021. In 19 of those countries, inflation was higher in 2021 than the average between 2005 and 2019. In 2021, inflation fell in only four countries: Antigua and Barbuda, Bolivarian Republic of Venezuela, Guatemala and Uruguay. It also increased in the first half of 2022, excepting only three economies, the Bolivarian Republic of Venezuela, Cuba and Saint Kitts and Nevis,” the report said.
It noted too, that in the first six months this year, 28 countries reported an inflation rate that exceeded the averages between January 2005 and December 2019. As of June 2022, the ECLAC report noted, the year-on-year rate was over 10 per cent in 13 countries, and in 20 countries, it had doubled from the previous year’s rate.
Looking at the subregions, the report showed that South America generally had the highest levels of price increases. This is a reality that has led to mass protests and violence in some countries there. Jamaica’s inflation level at June stands out, compared to the average rates across the English-Speaking Caribbean, although ECLAC pointed out that levels of CPI changes were affected by populations and size of economies.
“Although inflationary pressure has been generalised in all the subregions, as of June 2022, the economies of South America show the highest average inflation rate, at 8.7 per cent, followed by Central America and Mexico with a rate of 7.7 per cent, while the economies of the English-speaking Caribbean have the lowest average inflation rate, at 7.4 per cent,” it said.
In keeping with central bank actions throughout the region, the Bank of Jamaica has utilised a series of measures to curb inflation, with hikes in benchmark interest rates being the most notable. It has also intervened in the foreign exchange market and tightened reserve requirements of deposit-taking institutions to mop up liquidity.
The ECLAC report noted that at least 11 nations in the region have raised interest rates as a tool to control inflation. Jamaica adjusted its rates by 550 points from 0.5 per cent to 6.0 per cent to date, which generally aligns with the other nations highlighted by ECLAC. Brazil recorded the highest rise in rates at 13.25 per cent in July, after making 11 adjustments from 2.0 per cent a year earlier. Guatemala upped rates 50 basis points to 2.25 per cent from 1.75 a year ago.
Honduras did not adjust its benchmark interest rates over the 12 months to July 2022.
“Authorities have responded to the upturn in inflation by tightening their monetary stance, raising policy rates and dampening growth in monetary aggregates. In March 2021, the Central Bank of Brazil began to raise its monetary policy rate, a decision followed by most of the monetary authorities in the region that opted for inflation targeting. Most of the central banks adopted similar strategies, except for the Central Bank of Honduras, which has left its monetary policy rate unchanged since October 2020. This contrasts with the Central Bank of Peru, which has revised its rate 12 times,” the ECLAC document stated.