Jordan's inflation rate rose to 5.3 percent year-on-year in June from 5.2 percent in May, according to figures released by the Department of Statistics on Saturday. Compared with a month earlier, the June consumer price index (CPI) was up 0.3 percent due to rises in some major food and consumer items.
Inflation in the oil-importing kingdom in the first quarter of the year was running at 4.9 percent, buoyed by rising energy costs, according to the Department of Statistics, based on calculation methods dating from 2006. Inflation has picked up from 3.9 percent in January this year as commodities and oil prices have increased.
Economists expect it to hover around 6 percent this year while the government still hopes it will stay in a 3-4 percent range. Inflation fell sharply last year to average around 2-3 percent due to weaker domestic demand and falling energy prices during the global downturn, after hitting double digit levels in 2008 on the back of record oil and commodity prices.
The fall in inflation from record highs and the economic downturn had prompted the Central Bank of Jordan (CBJ) to slash its benchmark lending rates by a total of 250 basis points since November 2008. The discount rate is currently 4.25 percent.
But reviving inflationary pressures have fuelled expectations among analysts and dealers in domestic money markets that scope for further interest rate cuts is decreasing. This has sent average yields on 18-month Treasury bonds closer to 5 percent, edging up along with three-year bonds by at least 150 basis points since the start of the year, bankers say.