Macroeconomic Forecast Jamaica

BMI View: Jamaica's CPI increased 1.3% m-o-m in April, reaching its 14 month high following 14 consecutive monthly price rises. On a year-on-year basis, inflation was 14.3% for April, up from 13.4% in March. Given our forecast for a slowdown in US consumption in H210, we believe that a reduction in external demand pressures will keep further rises in check, with CPI hitting our 14% y-o-y projection by end-2010. Indeed, the annualised 3mma measure (to smooth out volatility) already indicates that prices peaked in February. However, we note the upward risks posed by the current domestic security issues, as there is potential for fiscal spending pressures to rise substantially going forward.

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