Thu | Jul 19, 2018

Food price movement outpacing inflation

Published:Friday | January 29, 2016 | 12:00 AMCamilo Thame

Jamaica registered 3.7 per cent inflation for 2015, according to the Statistical Institute of Jamaica, the lowest consumer price index (CPI) movement recorded in 15 years.

But in 2000, when a 3.1 per cent increase in the CPI was measured, the basket of goods being tracked was made up differently, such that food carried well over 50 per cent of the weighting.

What's more, that year could be classified as an otherwise anomalous year, given that inflation averaged 27 per cent a year over the decade leading up to then, and averaged 11.4 per cent annually over the subsequent decade.

This time, the CPI movement shows up in a period of single-digit inflation being experienced since 2011, when inflation was recorded at six per cent. It climbed to eight per cent the following year, then to 9.7 per cent in 2013, before falling to 6.4 per cent in 2014.

The smaller impact food price movements have on the index helped. Food and non-alcoholic beverages now carry 37.5 per cent of the weight, more than 15 percentage points less than it did a decade ago.

Put another way, vegetables and starchy foods, which include yam and potatoes, now cost double what they were at the beginning of 2011, according to the subindex for those items, whereas the CPI representing overall prices increased by 39 per cent over the five-year period.

Fruits are also twice as expensive as they were five years ago.

The statisticians figure consumers spend almost on much on breads and cereals, which make up 6.1 per cent of the basket, as they do on starchy foods and vegetables (6.9 per cent of the basket). But that index increased by just 37 per cent since 2010.

Meat, which makes up 7.7 per cent of the basket, and fish and seafood, 5.3 per cent, outpaced the overall CPI by two to four percentage points.

In its latest inflation report, the Bank of Jamaica said that information from Rural Agricultural Devlopment Authority indicates that supplies of vegetables and starchy food are forecast to reflect moderate increases in this month and next month. This should result in reduced prices.

Yellow yam, carrot and cabbage are expected to see seasonally high production in the early months of 2016, while output of tomato, pumpkin, and callaloo are expected to increase sharply from year-earlier levels.

Indeed, carrot prices at the farm gate have fallen dramatically during the month of January, according to data available on the Jamaica Agricultural Marketing Information System website. The same goes for pumpkin and tomatoes. Yam prices also fell, but not as sharply.

Still, slowed movement in transportation and energy prices have played a large role in keeping overall inflation down. The index for transport, which makes up 12.8 per cent of the basket, climbed by 28 per cent in the last five years. Electricity, gas and other fuels (7.1 per cent of the basket), rose by just 14 per cent since the beginning of 2011, reflecting a dramatic reduction in oil prices.