‘Inflation rate rising’
The rate of inflation is rising in Trinidad and Tobago.
The latest available data from the Central Statistical Office released by the Central Bank yesterday indicated there was an up-tick in headline inflation in December 2013.
On a year-on-year basis, headline inflation accelerated to 5.6 per cent in December 2013, from 4.4 per cent in November 2013 and a low of 2.7 per cent in October 2013.
Core inflation remained unchanged at 2.0 per cent (year-on-year) in December 2013. For 2013, as a whole, core inflation was well contained, ranging between 1.9 and 3.1 per cent.
“Meanwhile, there was some increase in food prices towards the end of the year, with food inflation accelerating to 10.2 per cent, compared with 7.3 per cent in November 2013 and 3.7 per cent in October 2013,” the bank said in its latest repo rate statement.
“In the coming months, if the oil spills that occurred in the Southwestern peninsula worsen the longer-term declining trend in the surrounding fish stocks, this may lead to some up-tick in fish prices and place upward pressure on food inflation.”
As expected, the energy sector returned to positive growth in the fourth quarter of 2013, following the completion in September 2013 of significant, coordinated maintenance works by the two major natural gas producers and the downstream industry, the bank said. “The loss of oil output arising from the December 2013 oil spills in Trinidad’s Southwestern peninsula did not adversely affect production activity in the energy sector in the fourth quarter. This rebound in the energy sector, coupled with the expected continued growth in the non-energy sector, suggests that the domestic economic recovery is continuing to gain traction.”
Core inflation was well contained toward the end of 2013.
However, the bank said liquidity levels in the banking system remained elevated and by November 2013 business lending had contracted for an entire year.
Meanwhile, the start to US monetary easing has prompted a narrowing of the interest rate differential between longer-term TT and US treasury bonds, but evidence of disruptive portfolio outflows has not been observed.
In this context,the Central Bank said its accommodative monetary policy stance was still appropriate and decided to maintain the repo rate at 2.75 per cent.