pending light bill hike threatens Inflation target
With a price hike for electricity looming, the Economic Programme Oversight Com-mittee (EPOC) is expressing fear that it could impact the inflation target which has been set under Jamaica?s medium-term economic programme, in agreement with the International Monetary Fund (IMF).
The Jamaica Public Service Company (JPS) has applied to the Office of Utilities Regulations (OUR) for an increase of the non-fuel tariffs, which could see Jamaicans paying an average of 21 per cent increase in electricity bills.
The Gleaner understands that the OUR is at the tail-end of the review. Contacted yesterday, Elizabeth Bennett Marsh, public-education specialist, would only said the regulator ?expects to make its determination of the JPS tariff very shortly?.
Byles said yesterday that with electricity being a very important component in the consumer price index, if the rate increase ?comes out on the high side, it is going to impact the cost of living?.
?The hope is that somehow, we can come out with a rate that is acceptable to JPS and allows them to do what they need to do as a company but, at the same time, does not put too much pressure on the cost of living index and on the ordinary Jamaican,? Byles said.
The Bank of Jamaica has forecast inflation to be in the range of seven per cent to nine per cent this fiscal year. It said that over the medium term, inflation should be lowered to a range of six per cent to eight per cent, while over the longer term, the objective is to achieve a gradual reduction of inflation to a rate that is consistent with that of Jamaica?s main trading partners.
On the matter of the JPS increase, Byles said ?If it is moderate, maybe we will scrape through, but that is a big concern going forward in respect to inflation.?
Up to press time yesterday, The Gleaner was unable to ascertain from the Planning Institute of Jamaica what would be the impact of a one per cent increase in light bills on inflation.
The Statistical Institute of Jamaica measured inflation at 2.1 per cent for June, moving inflation from January to 7.2 per cent. June?s inflation is the highest monthly change recorded in the last 12 months, driven mainly by fare increase in the Corporate Area, increased tuition fees and the effect of drought on food prices.
Audley Shaw, opposition spokesman on finance, told The Gleaner yesterday that he hopes the OUR takes into account the rapidly falling oil prices in making its determination.
?If you have falling oil prices and increasing electricity rates, it seems to be a disjuncture. It is going to have an impact on our ability to be competitive,? Shaw said.
Meanwhile, the EPOC co-chair characterised the outlook for the economy as ?cautiously optimistic?, reasoning that the optimism is based on Jamaica?s record of passing all five tests under the programme thus far.
?This is not an if business anymore, we know that we can meet these IMF quarterly tests; even if we have to stretch to do it, we know we can.?
Please see EPOC communique on Page A8.