Reduced JUTC Price Did NOT Help Inflation!

Turns out cutting bus fares didn’t help Jamaica’s inflation come down… So what’s the government gonna do now?

According to the Statistical Institute of Jamaica, the annual inflation rate in January was 7%. That means that things cost 7% more this January than last January.

Higher transportation cost was one of the main reasons. Now if you’re thinking, didn’t the Government announce a plan to help lower the impact that transportation would have on inflation? You’re right, they did, but things haven’t gone as planned.

Back in November, the Government announced a two-phase plan to reduce JUTC bus fares to help ease inflation.

JUTC is the Jamaica Urban Transit Company – those big yellow government-run buses.

Adult fares dropped from $100 to $70.  Student fares went from $30 to $25.  And pensioners started paying $30 instead of the regular $40.

The plan was to drop fares even further come April. 

So the Government announced this plan after the Bank of Jamaica, said a previous increase in taxi and minibus fares could drive up inflation by at least two percentage points.  They reasoned that lowering JUTC fares would help to offset the damage.

Well now, the BOJ is saying it overestimated.

According to a statement from the central bank, the lower JUTC fares are expected to have little to no impact on annual inflation. Whomp, whomp, whomp. 

Now when we look at the inflation numbers for just January, transportation costs actually did fall by one percentage point.  And while STATIN did partly attribute this to the reduction in adult bus fares, it also noted that fuel prices were lower in January. 

In the broader picture, the BOJ said the reduced fares would only shave about 0.2% off inflation a year. So, barely anything.

And if you guys remember, this is something I raised in the video I did talking about the reduction in the first place. How many people are actually taking JUTC buses for the price drop to have any real impact?

And at the time I was saying, maybe the lower prices would entice people to take the bus. But I guess not. I mean the lower prices combined with an overall improvement in JUTC, like more buses, better schedules etc could have helped, but there are still a lot of complaints about JUTC. 

Now, the BOJ said it accepted full accountability for the ‘over-estimatation’ and that’s great, but we still need a workable solution to address inflation.

And that’s the bottom line.