In T&T: Inflation increases to 11.8%. Central Bank blames it on food prices

28 May 2012


No change in repo rate despite inflationary pressure. Core figures only up 0.2%.

THERE has been an acceleration in the rate of inflation in Trinidad and Tobago.

The Central Bank announced yesterday that headline inflation increased to 11.8 per cent from 9.1 per cent in March.

In its repo rate statement, the Bank said data from the Central Statistical Office (CSO) indicated an outcome that represents the highest recorded increase in the inflation rate since January 2011, when it measured 12.5 per cent.

On a monthly basis, headline inflation rose by 2.8 per cent in April after having declined by 0.7 per cent in March 2012.

“The continuing rise in food price inflation was the major factor behind the sharp jump in the headline rate,” the Bank stated.

“On a year on year basis, food price inflation increased by 26.1 per cent in April 2012, up from 20.3 per cent in the previous month.”

The surge was led by sharp increases in the prices of fruit, at 48 per cent, and vegetables, 34.3 per cent, which were associated with weather-induced supply shortages.

Higher prices were also recorded in April for fish and sugar.

Prices also rose, at a slower pace, for oils and fats, breads and cereals, milk, cheese and eggs and meat.

Core inflation, which excludes food prices, edged upwards to 2.2 per cent in the 12 months to April 2012, after holding steady at under 2.0 per cent since April 2011.

“The acceleration in headline inflation continues to primarily reflect the influence of strong increases in food prices,” the Bank stated.

“Core inflation, which is a more useful indicator of underlying demand pressures, remains relatively stable although there are signs that it is beginning to inch up.

“Recent economic indicators, suggest that while credit conditions have been improving, activity in the non-energy sector remains lethargic and the domestic economy is still struggling to get into full recovery mode.”

The Bank added: “Against this background, the Central Bank has decided to maintain the ‘repo’ rate at three per cent.”

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