The Bank of Jamaica is warning Jamaicans to prepare for a long period of rising prices, with inflation unlikely to return to the central bank’s 4–6 per cent target until 2027. After two years of unusually calm inflation, Hurricane Melissa has sharply reversed the trend. The storm’s damage to farms, utilities, roads and businesses has begun pushing up the cost of food, electricity and basic services across the island.
Even though point-to-point inflation was just 2.9 per cent in October, the BOJ says this figure masks the real pressure building underneath. Core inflation—things like haircuts, transportation, household repairs, restaurant meals and personal care—is expected to rise throughout 2026. This suggests the impact of the hurricane will be broad and long-lasting, affecting everyday life in ways Jamaicans will feel month after month.
The wider economy is also under strain. The BOJ notes that economic output is expected to contract in the near term because so many businesses and livelihoods were disrupted. Early data from Statin shows the shift already taking shape, with vegetables, tubers and ground provisions rising sharply in October, alongside an increase in electricity costs. These are the same categories the BOJ warned would come under sustained pressure post-hurricane.
Government plans to temporarily suspend fiscal rules to fund reconstruction will add another layer. While necessary, the surge in public spending injects more money into the economy at a time when supply chains are weakened, increasing the likelihood that prices will stay higher for longer.
In responding to all this, the BOJ is taking a measured approach. It kept interest rates at 5.75 per cent, noting that raising rates cannot fix broken infrastructure and could deepen economic contraction. Instead, the central bank is prioritising stability in the foreign exchange market. It has already sold US$210 million into the system since the hurricane and will now provide foreign currency directly to energy companies while reintroducing scheduled, transparent FX interventions to ensure the market has adequate supply. A weaker Jamaican dollar would make imports—hardware, fuel, construction materials and food—much more expensive and worsen inflation during an already fragile recovery. Still, the BOJ made it clear it is prepared to raise rates again if inflation risks grow.
The next policy decision is set for December 18, when the BOJ will reassess whether inflation pressures are stabilising or spreading.
For everyday Jamaicans, the implications are straightforward but serious. Grocery bills are set to climb as farm damage limits supply, and these higher prices will not fade quickly. Electricity costs are also expected to remain elevated as restoration work continues and the energy sector faces higher input costs. Services that families rely on—transportation, grooming, household maintenance, and eating out—will steadily become more expensive as core inflation builds through 2026.
With wages unlikely to rise at the same pace, paycheques will not stretch as far, making weekly budget tracking even more important. Borrowing is also likely to remain costly, and the BOJ may tighten rates later if inflation worsens, meaning families should avoid taking on unnecessary debt and prepare for higher loan payments. As the Jamaican dollar remains vulnerable, holding part of one’s savings in US dollars becomes a useful buffer against sudden currency dips that could make imports more expensive. Small business owners will feel the squeeze too, facing higher input costs, slower demand and tighter margins as customers adapt to rising expenses.
The overall message from the BOJ is that Jamaica is entering a challenging period where the cost of living will rise faster than many households are used to. Preparation, careful budgeting and stronger financial habits will be essential over the next year.