Firms expect higher utility prices
Published:Friday | December 20, 2024 | 12:08 AM
Jamaican businesses are bracing for utility price increases, according to the latest Inflation Expectations Survey.
More than half of the businesses surveyed expect utility costs to have the most significant impact on their operations, up from one-third a year ago.
“Respondents indicated that they expected the largest increase in production costs over the next twelve months to emanate from utilities, stock replacement, as well as raw materials in that order,” stated the survey conducted by the Statistical Institute of Jamaica (STATIN) on behalf of the Bank of Jamaica (BOJ). Wages and salary increases ranked much lower among concerns by firms, the survey revealed.
Utilities topped the list of concerns for 51.3 per cent of respondents, followed by stock replacement at 23.9 per cent, raw materials at 9.0 per cent, wages and salaries at 8.2 per cent, and fuel and transport at 7.0 per cent.
Revenue at the National Water Commission (NWC) is projected to rise 16 per cent to $53 billion for the fiscal year ending March 2025. Year-to-date revenue at the Jamaica Public Service (JPS), the electricity provider, increased by 3.0 per cent to US$818 million over nine months. Meanwhile, Flow Jamaica, one of two major telecommunications firms, grew its revenue by 2.0 per cent to US$308.4 million over the same period. Digicel Jamaica’s financials remain private, and data from the utility regulator on the sector lags by two years.
The survey, which polled 306 CEOs, managing directors, and financial controllers, found that businesses expect inflation to trend higher over the next 12 months – a development that concerns the BOJ as it works to curb inflation through policy interventions.
“Businesses’ perception of the authorities’ control of inflation fell ... relative to the previous survey. This was largely due to an increase in the proportion of respondents that were dissatisfied with the way inflation is being controlled,” the report noted.
Survey respondents anticipate inflation will rise to 7.6 per cent over the next 12 months, exceeding the 12-month inflation rate of 4.3 per cent to November. The findings in these surveys inform the BOJ’s decision-making process.