New money, same old story

Photo by Dejagib

A new 5000 dollar Jamaican bank note, is not much to celebrate.

It is, in economic terms, a sign that inflation is happening.  That the money in your hand (or till) is worth less.

You can hardly buy much with your one Jamaican dollar any more, so you need a higher denomination note to buy things.

It is a sign of the times, showing how Jamaica’s economy is suffering, devalued you could say.  Rather than accept this fate, you would think that the Finance Minister would at least try to put a positive spin on things, to give the markets some sense of confidence, or shred of hope to hang onto.  He actually is quoted as saying,

“The dollar is losing its value because we are losing our competitive advantage … because we as Jamaicans are becoming less and less productive as the years go by!”

Not the most constructive of comments.   The note will be released in September.

Cheap Chicken ?

The decision has been made to increase the imports of chicken into Jamaica for Christmas.  The ministry of agriculture says it’s to satisfy demand over the busy period and to give shoppers a cheap alternative to locally sourced chicken.

I think it’s terribly short sighted and likely to backfire at a time when food security is really on shaky ground in Jamaica. 

Local farmers  say that they have already factored in the increased demand over Christmas and are obviously very worried about their business.  It would have to be made clear that the import permits are only for the christmas period – but even if they are (which is far from clear) it will be bad for the local economy as money that could have been going into the Jamaican economy is going out – on yet more imports. 

Yes Jamaicans love their chicken – go to any one of KFC restaurants or, as I prefer get some chicken cooking on the red hills road on a friday night in Kingston and ask the people if they would pay a little more for their chicken if they thought this would keep prices on a level.  By damaging the local poultry industry in this way, depresses local income and leaves Jamaica even more wide open to currency fluctuations and yet more rising food prices in the future.

Jamaica’s currency devaluation

The Jamaican dollar is currently trading at 74 to one against the United States currency.  Against the British pound, it is also down, you can get 1.19 JA dollars to every pound now.  There was a recent devaluation of the JA dollar, which means that imports have become more expensive to buy.

One of the important things that is more expensive is OIL.

Petrojam has announced an 11 cents increase — that is less than one cent US — for the three types of fuel available at the pumps – unleaded 87, 90-octane and E10.

The increase means motorists now pay 55.69 J dollars (0.75 US dollars) per litre of unleaded gasoline; 57.13 J dollars (0.76 US dollars) per litre of 90-octane; and 53.66 J dollars (0.72 US dollars) per litre of E10.

Jamaican motorists are also paying more for diesel, which has increased by 75 cents to 66.68 J dollars (0.89 US dollars) per litre.

The domestic kerosene price has also increased by 82 cents o 65.25 J dollars (0.87 US dollars) per litre.

Cooking gas was the only product to see a decrease in price.  It is now being sold for 23.26 J dollars (0.31 US dollars) per litre, down 27 cents per litre.

The changes were announced as world oil prices tumbled below 62 US dollars a barrel, continuing weeks of steady decline after hitting a record high of 147 US dollars a barrel on July 11.

All this is good for Jamaican exports of course, but bad for domestic inflation.  As prices for most things goes up (dies to reliance in imports), people will feel it even further in their pockets.