The latest available data from the Central Statistical Office shows that headline inflation continued to slow in October 2013, the Central Bank said yesterday.
In the 12 months to October 2013, headline inflation decelerated to 2.7 per cent from 3.0 per cent in September and 5.1 per cent in August 2013.
This was mainly due to a slowdown in core inflation which stood at 1.9 per cent in October 2013 from 2.9 per cent in the previous month.
Meanwhile, after slowing to 3.0 per cent (year-on-year) in September 2013, food inflation rose to 3.7 per cent in October 2013.
However, the recent heavy rains and resulting floods in Trinidad may lead to some up-tick in food inflation in the coming months, the bank said in its latest repo rate statement yesterday.
It said planned large scale maintenance activity by the two major natural gas producers and coordinated maintenance shutdowns in the downstream industry in September severely contracted production throughout the energy sector in the third quarter of 2013.
“Partial information on non-energy sector activity, however, indicates a mixed performancein the third quarter of 2013, suggesting that the economy still remains on its path of slow but steady recovery,” the Bank said.
Core inflation has been well contained in the first ten months of 2013 and is expected to remain stable for the rest of the year. Food price inflation has also decelerated significantly to within single digit territory.
However, liquidity levels in the banking system remain high and business lending contracted for the tenth consecutive month in September 2013, the bank added.
Meanwhile, despite a narrowing of the interest rate differential between longer term TT and US treasury bonds, there has been no evidence of disruptive portfolio outflows.
“In this context,the Central Bank views the present accommodative monetary policy stance as appropriate and has decided to maintain the ‘repo’ rate at 2.75 per cent,” the bank said.