Cost of living rises in September, but annual inflation declines
Published:Wednesday | October 19, 2022 | 12:09 AMKarena Barrett/Business Reporter
Jamaicans were forced to dip deeper into their pockets for the month of September, owing to increased prices in the division ‘housing, water, electricity, gas and other fuels’, according to the latest data from the Statistical Institute of Jamaica.
The inflation rate, at 1.4 per cent for the month, was mainly impacted by a 9.2 per cent rise in the group ‘electricity gas and other fuels’, which triggered a 4.1 per cent rise in the index for the division ‘housing, water, electricity, gas and other fuels’.
“This resulted mainly from the cessation of the Government’s 20 per cent subsidy on electricity bills for customers who use 200 kilowatts per hour or less,” Director of the Statistical Institute of Jamaica, Carol Coy, said. She was speaking at Statin’s virtual press briefing on Tuesday.
Still, annual or point-to-point inflation was back below double digits at 9.3 per cent, down from 10.2 per cent in August.
That’s an important shift for watchers of the central bank, whose aggressive interest rate hikes have been linked to the sharp rise in inflation over the past year and has led to friction with the business community.
The current inflation rate, however, is still more than three points outside the upper band of the 4 to 6 per cent target range that Bank of Jamaica is mandated to defend.
The annual inflation out-turn in September was mainly attributable to increases in the division ‘food and non-alcoholic beverages’, which went up by 10.5 per cent; ‘housing, water, electricity, gas and other fuels’, up 8.5 per cent; and an increase of 19.4 per cent in the division for restaurant and accommodation services.
Effective May 1, the Government of Jamaica moved to lower the electricity bill of customers who use 200 kilowatt-hours of electricity or less by 20 per cent under its ‘We CARE Energy Co-Pay’ programme that was designed to help households cope with higher electricity bills amid skyrocketing oil prices.
The measure was expected to benefit roughly 81 per cent of power utility Jamaica Public Service Company’s customer base, but was only set to last until July. It meant that electricity consumers were back to paying higher light bills since August.
Coy said the rise in inflation rate for the month of September was also impact by a 1.1 per cent rise in the index for the division ‘food and non-alcoholic beverages’, primarily attributable to higher prices in the class ‘vegetables, tubers, plantains, cooking bananas and pulses’.
“The index for this class increased by 3.5 per cent. Additionally, there was an increase of 5.3 per cent for the index for the education division, resulting in higher tuition fees charged by private primary-level institutions,” she said.
Meanwhile, Statin reported that the Jamaican economy grew 4.8 per cent in the second quarter, covering the months of April to June 2022, when compared to the corresponding quarter of 2021. The out-turn was 0.9 percentage point below the preliminary estimate reported by the Planning Institute of Jamaica in August.
The growth resulted from a 7.2 per cent increase in the services industries, whereas goods-producing industries declined by 2 per cent year-over-year.
“Contributing to the improvements for the second quarter were the removal of measures implemented to limit the spread of COVID-19, such as the revocation of the Disaster Risk Management Order, the expiration of the COVID-19 pre-test requirement to travel to the island, and the reopening of the entertainment sector,” Coy said.
When compared to the first quarter of 2022, January to March, total value-added increased by 1.3 per cent, a continuation of the trend observed since the third quarter of 2020, the director general added.
All segments across the services industry recorded growth for the quarter, the largest contributor being the hotels and restaurants segment, which grew by 56 per cent when compared to the second quarter of 2021.
The growth of the hotels and restaurants segment greatly benefited from an increase of 79.2 per cent in foreign national arrivals during the period.
Also recording growth were the segments wholesale and retail trade, repairs, installation of machinery and equipment, up 7.6 per cent; transport storage and communication, up 5. 7 per cent; and other services – which includes entertainment and tourism-related activities – grew by 9.8 per cent.
Other contributors included financing and insurance services, which rose by 1.1 per cent; real estate renting and business activities by 2.1 per cent; producers of Government services by 0.4 per cent; and electricity and water supply, which increased by 2 per cent.
However, the decline in the goods-producing industries was said to be largely due to lower output levels in mining and quarrying, down 62.5 per cent; and construction, down 5.2 per cent. The agriculture, forestry and fishing and manufacturing industries, however, grew during the quarter by 6.3 per cent and 5.6 per cent, respectively.