BoJ Releases its Jamaica Inflation Outlook

• In its December 2025 Quarterly Monetary Policy Report, the Bank of Jamaica (BOJ) communicated that it revised its inflation outlook upwards, amid an adverse agricultural supply shock from Hurricane Melissa, second-round effects on services (household maintenance, transport, energy, personal care) and processed food inflation, alongside stronger domestic demand tied to rebuilding and reconstruction activity.
• Average headline inflation is projected to rise to 7.4% over December 2025–September 2027, up from 4.9% over the previous eight quarters, breaching the Bank of Jamaica’s (BOJ’s) target range over the next year and peaking at 11.5% in the June 2026 quarter before easing back within target toward the end of the near term as supply conditions improve. The Comparative Core Inflation Forecasts (CPIAF) is similarly forecast to average 6.1%, higher than the 4.6% average over the prior two years.
• Imported inflation, notably from grains and oils, is expected to remain generally stable, while the first-round impact of higher U.S. tariffs is projected to be marginal, adding only approximately 0.1 percentage point on average to domestic inflation over the next eight quarters.
• Inflation expectations are projected to rise from 5.8% in the September survey to above the upper bound of the target range and remain elevated in the near term. The output gap is forecast to be negative in December 2025–March 2026, then turn positive as reconstruction, supported by an expansionary fiscal stance, gains momentum, with the gap closing by March 2029.
• S. demand is expected to soften with its output gap turning negative from June 2026 as oil prices are projected to decline by about 1.0% QoQ on average, U.S. LNG prices set to rise gradually, and freight costs have fallen sharply (-41.3% by September 2025). These are partly offsetting inflationary pressures amid reduced U.S. import demand due to higher tariffs.

(Source: Bank of Jamaica)