In T&T: Marginal drop in inflation

30 April 2012


Sluggish credit conditions, moderate decline in inflation, amount to CBTT maintaing the repo rate at 3.00%

THE past month has seen a marginal drop in headline inflation, the Central Bank said yesterday.

The bank said in a statement that data from the Central Statistical Office (CSO) has shown that headline inflation has slowed slightly and is down to 9.1 per cent in March, compared to 9.2 per cent in February 2012.

Headline inflation is measured by the 12-month increase in the Index of Retail Prices.On a monthly basis, the overall price level decreased by 0.7 per cent in March, following an increase of 1.6 per cent in February.

Food price inflation, the principal cause so far of the “relatively high” headline rate, increased marginally to 20.3 per cent in the twelve months to March from 20.2 per cent in February, the Bank said.

The main contributors to food price inflation were increases in the prices of fruits, a 59.9 per cent increase and vegetables, a 17.7 per cent increase.

Faster price increases were also recorded for oils and fats‚ÄĒat 19.1 per cent in March‚ÄĒcompared to 17.9 per cent in February. The rate of increase slowed for bread and cereals, at 5.2 per cent, compared with 5.9 per cent in February, fish, at 12.6 per cent, compared with 13.6 per cent in February and milk, cheese and eggs, at 7.5 per cent compared to 8.6 per cent in February.

Core inflation has remained relatively unchanged at 1.8 per cent in March 2012 and for the previous two months.

“Although headline inflation is just below the double digits, most of the increase in the headline rate has been driven by food inflation, which is influenced by inclement weather conditions,” the bank stated.

“By contrast, core inflation, which provides a better guage of underlying demand pressures, has remained contained for the year thus far. Recent trends in credit, especially to consumers and businesses, suggest that pace of recovery in private sector demand is still relatively sluggish. Against this background, the bank has decided to maintain the ‘Repo’ rate at 3.0 per cent.”

The next “Repo” rate announcement is scheduled for May 25.

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