The Bank of Jamaica. - File
Central bank Governor Derick Latibeaudiere has projected headline inflation for the June quarter of five to six per cent, and has signalled that prices are set to climb even higher as the year progresses.
First quarter inflation was 5.2 per cent.
That warning comes as oil prices galloped above US$123 per barrel this week before dropping back slightly.
Latibeaudiere now predicts fiscal inflation will land at 14.5 per cent but warns of upside risks - rising food commodity prices, transportation and utilities, and weather - meaning he could in later periods recast price movements higher.
Water rates, for example, will rise by 28 per cent following the granting of an increase to the National Water Commission by its regulator, the Office of Utilities Regulation.
"Going forward, the main challenge for the central bank will be to temper the rate of price increases and moderate inflationary expectations," the BOJ governor said at his quarterly briefing on the economy.
But in slightly better news, the central bank also said its analysis of the slowdown of the US economy indicates its impact on Jamaica will be "marginal", lowering growth by 0.4 percentage point, relative to the forecast of 3.0 per cent growth in FY 2008/09, said the bank's Quarterly Monetary Policy Report for the March quarter.
Marginal impact
"This marginal impact is mainly attributed to the anticipated short duration of the recession as well as the relative small contribution to GDP of the sectors which would be primarily affected," said the report.
"The adverse impact of the recession is expected to be predominantly reflected in the mining, tourism, export manufacturing and transportation industries, and, to a lesser extent, the distributive trade sector."
Latibeaudiere predicts the recession will only last eight months.
Growth for Jamaica's June quarter is forecast at 1.5 to 2.5 per cent, and between 2.5 and 3.5 per cent estimated for the fiscal year.
sabrina.gordon@gleanerjm.com