Sep 2016 Financial News

Inflation down to 2.1% for July. On track to match inflation in trading partners — BOJ

Sep 07, 2016

Inflation for the September 2016 quarter is projected to accelerate due to stronger domestic demand conditions, but the Bank of Jamaica (BOJ) is expressing confidence that core inflation, towards fiscal year end, will remain moderately low.

The bank has set a target of 4.5 per cent to 6.5 per cent inflation for the year, projecting that inflation will rise to meet the target by the end of the fiscal year with an uptick in the second half of the fiscal year due to a moderate increase in commodity prices.

In its Quarterly Monetary Policy Report (QMPR) for the April to June 2016 quarter, bank head Bryan Wynter outlined that 12 -month inflation decelerated to 2.5 per cent in June 2016 from three per cent in March 2016.

Information from STATIN confirmed a further deceleration to 2.1 per cent in July 2016.

The low inflation outcomes reflected moderate increases in domestic agricultural prices partially offset by declines in the cost of energy and transport-related services.

Core inflation also remained subdued, reflecting lower exchange rate pass-through and the effects of continued fiscal restraint and cautious monetary policy adjustments, Wynter said.

Speaking optimistically, he commented, “Inflation expectations in the country continue to portray inflation firmly anchored in low single digits.

“Our objective in the medium term is to return inflation closer to where it is now, in line with inflation in Jamaica’s main trading partners. From the evidence, this is not a “stretch” goal but in fact a goal that is now patently achievable, a goal that the public can reasonably expect should be achieved by their monetary authority,” he said.

Wynter pointed to the Bank’s most recent Inflation Expectations Survey, conducted in May 2016, where expected inflation 12 months ahead declined to 3.8 per cent from 4.3 per cent in the February 2016 survey.

“This is encouraging, as expectations for inflation in the future continue to be less than the fiscal year,” he concluded.

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter
Jamaica Observer
Wednesday September 7, 2016    

http://www.jamaicaobserver.com/business/Inflation-down-to-2-1--for-July_73130