The Bank of Jamaica (BOJ) has formally revised Jamaica's inflation target towards single-digit territory following the passage of Hurricane Sandy.
Concurrently, BOJ Governor Brian Wynter responded to concerns on whether his contract which ends this year would be renewed.
"Address that question to the minister of finance," said Wynter, who assumed the role of governor in 2009 following the exit of Derick Latibeaudiere under the former Jamaica Labour Party administration.
Wynter assured a fist of four journalists at the BOJ headquarters that Sandy's impact would not spike inflation into double-digit territory. The bank now expects that consumer prices will rise by between 7.5 to 9.5 per cent for fiscal year 2012-13.
"This expectation incorporates our preliminary assessment of the impact on prices of Hurricane Sandy," said Wynter.
Sandy, a category one hurricane, hit the island last week resulting in loss of life, property and produce.
Preliminary estimates up to Tuesday placed the two biggest losses at J$2.6 billion for infrastructure and J$1.5 billion for agriculture.
Wynter said a fuller assessment on Sandy and the impact on inflation and growth would be released later this month at the BOJ's regular quarterly press briefing.
"The main impact will be on agricultural prices," the central bank chief said, adding that it really depends on the net effect on price hikes during periods of shortages and replanting and the subsequent fall following reaping.
Tropical Storm Nicole, which hit Jamaica in September 2010, added 0.5 per cent to the overall inflation rate, recalled the BOJ governor.
Inflation for the first half of the ensuing fiscal year stood at 3.6 per cent, and the bank expects the next six months to offer similar levels of inflation.
"The more favourable outlook relative to the previous forecast also reflects lower than originally anticipated international commodity prices, continued excess capacity and a marginal increase in real wages," he said.
In September, Wynter revealed his shift towards a more favourable inflation outcome than the central bank's revised forecast released in June, saying it could hit single-digit but at the time refrained from officially revising the central bank's double-digit forecast of 10-12 per cent.
The BOJ, whose mandate includes inflation forecasting, feared price hikes resulting from new taxes emanating from this year's budget. However, the impact was lower than anticipated because of the weak economy, Wynter said.
"With September's inflation recently announced by STATIN, we can now confirm that very little of the tax increase has been reflected in consumer prices," he said.
September inflation was 1.9 per cent.
The BOJ governor said that inflation for the June and September quarters stood at 1.5 and 2.1 per cent, respectively.
In June, the bank revised its inflation forecast from six to eight per cent to 10-12 per cent, then citing higher than projected rises in the cost of crude oil.