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Inflation slows to 8.1%

The rate of inflation in Trinidad and Tobago has shown a "marked deceleration" for November.

The latest available data from the Central Statistical Office (CSO) released by the Central Bank yesterday showed that headline inflation slowed to 8.1 per cent last month, from 9.4 per cent in October.

Food inflation, which continues to exert a strong influence on the headline inflation rate, slowed to 14.9 per cent, down from 18.2 in October.

The impact of the removal of Value Added Tax, effective November 15, on several food items was not reflected in the inflation data for November 2012. Instead, the moderation in food price inflation reflected for the most part the decline in fruits (falling 0.6 per cent in November after rising 5.7 per cent in October). There was also a slower price increase for vegetables (28.1 compared to 34.9 in October); meat (10.3 per cent in November compared with 10.5 in October); milk, cheese and eggs (0.4 per cent compared with 2.6 per cent); oils and fats (6.1 per cent compared with 12 per cent); and sugar and confectionery products (2.7 per cent compared with 3.1 per cent).

Prices rose at a faster rate for fish (9 per cent in November from 8 per cent in October), and bread and cereals (1.4 per cent from 1.1 per cent).

Core inflation (which excludes food prices) measures 3.1 per cent. The increases in sub-indices for alcohol, tobacco and health were counterbalanced by a reduction in the rate of increase in clothing and footwear.

Private sector credit edged up in October, but was still broadly unresponsive to current financial conditions.

High liquidity levels continued to suppress short term interest rates, the Bank observed in its repo rate review.

The slow pace of expansion in consumer and business credit suggests that aggregate demand has not picked up sufficiently to create the momentum required for a sustained economic recovery. With underlying inflationary pressures in check, the Bank continues to adopt an accommodative monetary stance to support the resurgence of economic activity, especially in the non-energy sector. Against this background, the Bank said it has decided to maintain the Repo rate at 2.75 per cent.

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