On Friday, 15 January 2021, the Statistical Institute of Jamaica (STATIN) published its bulletin for the Consumer Price Index for December 2020. In this report, it was noted that, for calendar year 2020, the inflation rate was 6.4 per cent.
The same release by STATIN also noted that the point-to-point inflation rate as at December 2020 was 5.2 per cent.
The calendar-year measure of inflation reports the movement in the CPI as at December 2020 relative to the CPI at January 2020. On the other hand, the point-to-point measure of inflation reports the movement in the CPI as at December 2020, relative to the CPI at December 2019.
We note that it is not normal for these figures for the calendar year inflation versus the point-to-point measure as at December 2020 to be significantly different. In this case however, the difference between the two numbers reflected the timing of shocks that affected the CPI during 2020. In addition, these differences have resulted in some confusion as to whether Bank of Jamaica (BOJ) was successful in meeting its inflation target of 4.0 per cent to 6.0 per cent at December 2020. In fact, some elements of the media have already incorrectly reported official inflation at December to be 6.4 per cent.
We therefore wish to clarify and remind that the inflation measure by which BOJ’s performance should be judged is the annual point-to-point as at December and not the calendar year or any other measure.