In a development that runs counter to historic trends, price movements have in recent months, moved faster for wealthy Jamaicans than for the poor, new economic data show.

The most common measure of price movements in the economy is the Consumer Price Index (CPI), which tracks the movement of prices in a representative basket of goods for households that spend below $581,000 a year.

But there is a little known upper-income index (UI-CPI), which tracks the price movement for the big spenders - $581,000 or more - and it is the up-tick in this index, which, since July, has been faster that the conventional CPI - albeit marginally.

Upward movement

According to the latest data released by the Statistical Institute of Jamaica, the UI-CPI showed a 7.5 per cent upward movement for the 12 months to September 30, compared to the 6.5 per cent rise in cost for the lower income basket.

The Bank of Jamaica (BoJ) highlighted the occurrence in its Quarterly Monetary Policy Report for the July-September 2006 quarter.

Historically, inflation has tracked higher among poorer households. For instance, prices in September last year were 19 per cent higher for the conventional basket compared to a 15 per cent increase in the UI-CPI over the same period.

At the time, food costs to consumers were running high due to the fallout in the agricultural sector which supply about a quarter of the goods to the CPI basket.

The lower weighting of food in the UI-CPI - 36 per cent compared to 55.6 per cent in the CPI - reflecting differing patterns among the rich and poor explained the lower price movement affecting the wealthy.

"This is consistent with economic theory," said the BoJ report, "which states that at higher levels of income there are lower propensities to consume basic goods, which would dominate the food and drink group."

Higher annual inflation

But it was the higher weighting for housing and other housing expenses of 18.6 per cent compared to 7.9 per cent for the CPI; health care and personal expenses of 9.1 per cent compared to 7.0 per cent; and transportation costs, 11.5 per cent or 6.4 in the CPI that resulted in higher annual inflation for the rich.

In July, the 12 month upward movement UI-CPI was nine per cent compared to 8.5 per cent for the CPI. There was a small uptick in August for both indices, but the difference between the two measurements remained the same until September when it widened to one percentage point.

camilo.thame@gleanerjm.com