Inflation rate shows slight slowdown
There has been a slight deceleration in the rate of inflation in the country, the Central Bank said yesterday.
The latest data released by the Central Statistical Office indicates that in June, headline inflation, measured by the 12-month increase in the Index of Retail Prices, slowed to 11 per cent down from 12.6 per cent in May, the Bank said in its repo rate statement.
“Food price inflation, which continues to be the dominant factor behind movements in the headline inflation rate, measured 24.1 per cent (year-on-year) in June 2012 compared with 28.3 per cent in May,” the Bank said.
Within the food sub-index, there was some deceleration in the rate of increase in the prices of fruits (31.4 per cent compared with 41.4 per cent in May) and vegetables (42.1 per cent compared with 45.2 per cent in May).
Slower price increases were also recorded for dairy products, meat and oils and fats.
By contrast, the price of fish accelerated to 11.3 per cent (from 5.3 per cent in the previous month) in the context of reported declines in fish catches.
Underlying inflationary pressures appeared to be relatively well-contained, the Bank said.
Available data showed that private sector credit continued to expand, albeit at a relatively slow pace.
All the major lending categories registered growth with consumer and business credit expanding by 1.1 per cent and 4.6 per cent, respectively.
At the same time, real estate mortgage lending remained robust, increasing by 9.8 per cent in the 12 months to May 2012 in the context of more intense advertising by commercial banks and an apparent increase in the demand for real estate, given the low interest rate environment, the Bank said, adding that excess liquidity in the financial system has retreated significantly from the high levels experienced in previous months.
“While credit conditions have been recovering, there is still room for further expansion to spur private demand and rekindle economic growth,” the statement added.
Against this background, the Central Bank said it will maintain the ‘repo’ rate at 3.0 per cent.