Annual inflation falls to 8.1%

Consumer prices decelerated into negative territory in January, bringing the annual inflation rate closer to the top end of the central bank’s target band.

Prices deflated by 0.6 per cent in January after a flat December, Statin reported on Wednesday. Annual inflation also fell by more than a point to 8.1 per cent.

The new outturn will weigh on the decisions of the central bank’s Monetary Policy Committee, which will meet to determine whether it will continue to raise interest rates as it has done nearly consistently for more than a year, or hold rates steady at 7.0 per cent as it did in December. Its decision will be released on Monday, February 20.

Analysts polled by the Financial Gleaner say they expect the central bank to maintain its holding pattern. None expected the Bank of Jamaica to cut rates.

Jamaica is an import-dependent economy, with food and fuel being its top foreign purchases, which means that international commodity prices tend to weigh on local inflation. Recently, however, the prices of oil and other energy products have been on the downswing. And the UN Food and Agriculture Organization, too, has reported 10 months of consecutive decline in the FAO Food Price commodity index up to January.