Jamaica’s inflation rate dropped to 5 percent in 2024, marking the lowest annual rate since 2018, when it was recorded at 2.4 percent, according to a report released Wednesday by the Statistical Institute of Jamaica (Statin).
This decrease follows a 6.9 percent inflation rate in 2023 and a 10-year high of 9.4 percent in 2022. The Bank of Jamaica successfully kept price increases within its target range of 4-6 percent. However, despite the moderation in inflation, rising costs for essential goods such as food and housing continue to place significant pressure on households in 2024.
Food prices in Jamaica rose by 8.1 percent in December 2024 compared to the previous year, largely driven by higher costs for fruits, vegetables, and pulses. Items like bananas, tomatoes, and plantains saw particularly sharp price increases. Housing-related expenses also climbed, with higher rental costs and electricity rates contributing to the rise.
The ‘Restaurants and Accommodation Services’ sector experienced a 4 percent price increase over the year ending in December 2024, primarily due to rising costs for meals from fast food outlets, street vendors, and cookshops. On the other hand, transport costs eased slightly, thanks to lower petrol prices, offering some relief from overall inflationary pressures. Other categories, including health services, restaurants, and personal care products, saw moderate price increases throughout the year.
The Bank of Jamaica anticipates that inflation will remain within its target range of 4-6 percent over the next two years, with occasional temporary dips below 4 percent in some months during 2024 and 2025. These dips are expected to be driven by lower transport-related costs and agricultural prices. Reflecting this outlook, the central bank has revised its inflation forecast for the two-year period starting in November 2024 to an average of 5.0 percent, down from the previous projection of 6.4 percent. This revision takes into account easing demand pressures, reduced inflation expectations, and a slower pace of currency depreciation. While the outlook remains positive, the Bank expects any breaches below the lower end of the target range to be short-lived, with inflation generally staying within the target range over the medium term.
Despite its optimistic inflation outlook, the Bank of Jamaica cautioned that maintaining price increases within its mandated range could face challenges in the coming months. The central bank pointed to factors such as reduced global inventory, geopolitical tensions, and ongoing US-China trade uncertainties, which could push grain prices higher than anticipated. Additionally, domestic agricultural disruptions, particularly delays in crop production recovery due to Hurricane Beryl and Tropical Storm Rafael, could threaten price stability. These setbacks are expected to delay recovery until March 2025, contributing to higher-than-expected inflationary pressures in the December 2024 quarter.
