Inflation Accelerates to 8.6% in September as Food Prices Surge

  • Local inflation accelerated in September, as the pace of monthly price increase more than doubled. Data from the Statistical Institute of Jamaica (STATIN) showed that consumer prices rose 1.5% in August 2026 compared with 0.6% in August. Consequently, point-to-point (P2P) inflation increased for the fifth consecutive month to 8.6%, from 7.9% in August. This represents the highest outturn since December 2022, marking a fourth consecutive month above the upper limit of the BOJ’s 4%-6% target range.Higher food prices were the main driver of the monthly increase, with the Food and Non-Alcoholic Beverages division rising by 2.9%, nearly double the 1.5% increase recorded in August. This was due mainly to a 10.5% increase in the price of produce. As a result, the division was 12.4% higher on a P2P basis, consistent with the impact of El Niño-induced drought conditions on domestic crop yields.

  • The Housing, Water, Electricity, Gas and Other Fuels division also increased by 0.7%, reversing the 0.7% decline recorded in August, owing mainly to higher electricity and household rental rates. This suggests that the relief from lower electricity rates in August has already begun to unwind, although the division's P2P rate eased to 4.5% from 4.8% in August. Additionally, the Education division rose by 4.0%, reflecting the seasonal increase in private primary school tuition fees at the start of the new school term.

  • Transport inflation remained elevated at 14.6% P2P, unchanged from August, and continued to record the highest annual rate among the key contributing divisions. The combined effect of higher fuel prices, the July 2026 route-taxi and hackney-carriage fare adjustment and higher toll rates continues to keep transport costs elevated. Importantly, these costs could extend beyond the Transport division by raising distribution and operating costs across the wider economy.
  • Food and energy remain the principal upside risks to the inflation outlook. The intensification of El Niño-induced drought conditions could continue to constrain domestic agricultural production, while tensions in the Middle East and the Russia-Ukraine conflict could sustain elevated energy prices and their pass-through to fuel, electricity, transportation and distribution costs. Conversely, an improvement in weather conditions and an easing of geopolitical tensions could support some moderation in inflation over the coming months.
  • The September outturn follows the BOJ's decision to raise the policy rate by 50 basis points to 6.0%, its first increase since 2022. The Monetary Policy Committee noted that inflation pressures were likely to persist for longer than originally anticipated and expects headline inflation to continue rising in the near term before returning to the target range by mid-2027.
  • With inflation remaining above the BOJ’s upper limit, this strengthens expectation for further tightening (50bps) at the BOJ's next policy decision on November 18. Some economists have also projected that further rate increases could be on the table if price pressures persist, while others warn that global tightening and domestic recovery spending could force additional tightening. That said, Governor Dr. Brian Langrin indicated that the central bank would be content to leave interest rates steady if inflationary pressures do not worsen and business inflation expectations settle down. However, the BOJ also noted that it remains prepared to deploy additional policy tools if needed.

(Sources: STATIN, BOJ & NCBCM Research)