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CSO: Inflation up 1% from last year

 Trinidad and Tobago’s inflation rate for February 2014 was 3.9 per cent, one per cent up from January’s 2.9 per cent recording, latest Central Statistical Office (CSO) data show.

In a release yesterday the Central Bank, which uses CSO statistics, said core inflation accelerated to 2.7 per cent (year on year) in February 2014 from 2.0 per cent in December 2013. There was a pick-up in the ‘entertainment’ related sub-categories such as recreation and culture, hotels, cafes and restaurants, and alcoholic beverages and tobacco in early 2014. Food inflation decelerated to 5.2 per cent in February 2014 from 10.2 per cent in December 2013. 

The bank said results from its first Business Confidence Survey suggest that the business community is cautiously optimistic about the strength of the Trinidad and Tobago economy within the next 6-12 months. The Survey, done in conjunction with the Arthur Lok Jack Graduate School of Business, showed that in the first quarter of 2014, the local business community was most confident that the financial performance of businesses would improve within the next 6 to 12 months. In addition, firms were optimistic that their production levels would increase in the next 6 to 12 months. Executives were less confident (though still optimistic) that they would increase their capital investments and employ more workers in the short-term. 

Business lending contracted for the fourteenth consecutive month in January 2014, but at the slowest rate of decline (0.8 per cent) since December 2012. 

Private sector credit picked up in January 2014, rising by almost 5.0 per cent in January 2014 year on year, up from around 3.5 per cent in December 2013. This expansion was driven by higher demand for consumer and real estate mortgage lending. Real estate mortgage loans remained robust, expanding by 14.5 per cent in January 2014. 

Liquidity levels declined to $6.4 billion in January before rising again to a daily average of $6.7 billion in February; from March 5- 24, average excess liquidity was $7.1 billion as fiscal injections rebounded.

Open market operations and Central Bank sales of foreign exchange to authorized dealers together withdrew $893 million in January, $831 million in February and $395 million in the first three weeks of March 2014. The domestic foreign exchange market remained relatively tight in February and most of March 2014; purchases of foreign currency by authorized dealers from the public amounted to US$691 million, while sales amounted to US$872 million. The resulting gap of roughly US$181 million was met by Central Bank’s sales of foreign currency to authorized dealers. Conversions are expected to increase towards the end of March 2014, as energy sector companies prepare to meet their quarterly tax obligations. 

“In light of these circumstances, the Central Bank has decided to maintain the ‘Repo’ rate at 2.75 per cent while its liquidity absorption measures take effect. The bank will continue to monitor developments in the market and is prepared to take further action as appropriate,” the release said. The next monetary policy announcement is scheduled for May 29.

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