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`bkqo^i=_^kh=lc==qofkfa^a=C=ql_^dl=POST OFFICE BOX 1250
PORT-OF-SPAIN, TRINIDAD, WEST INDIESTELE: 625-4835, FAX: (868)
623-1955E-Mail Address:[email protected]
MediaRelease
RISING FOOD PRICES DRIVE YEAR-END HEADLINE
INFLATION RATE TO 13.4 PER CENT
Thefinal
inflationfiguresreleasedbytheCentralStatisticalOfficefor2010
indicate
that headline inflation surged in the last twomonthsof2010 to
reach 13.4 per cent in
December comparedwith 12.5per cent inOctober. Core
inflation,however, remained
virtuallyunchangedfromOctober2010at4.7percent(yearonyear).
Food price inflation,whichhad reached ahighof 39.1per cent
inAugustbefore
easingto26.7percentinOctober,roseagainto29.5percentasatDecember2010.
The
unprecedented level of food price inflation is mainly due to
domestic supply shocks
resulting fromunusuallyheavy floods. InDecember2010,
thepricesofvegetables, fruits
andmilk,cheeseandeggswere42.5percent,32.4percentand11.3percenthigherthan
ayearearlier.
As regards core inflation, the subindices for Health and
Alcoholic Beverages and
Tobaccopostedsloweryearonyearincreasesof3.8percentand6.0percent,respectively
whiletherewasa1.5percentdeclineinthesubindexforclothingandfootwear.
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On themacroeconomic front,while recenteconomic indicatorspoint
to improved
energysectoractivity,thepaceofrevivalinthenonenergysectorremainstardy.
Business
firmsseem tobestillreticentaboutengaging innew
investmentactivitywhileconsumer
sentiment,thoughimproving,remainscautiousabouttheeconomysgrowthprospects.
Private sector credit by the consolidated financial system, an
important gauge of
demandconditions,declinedforthefifteenthconsecutivemonthby2.5percent(yearon
year) ledbythe5.9percentfallinbusinesscredit.
Consumercredit,ontheotherhand,
stagedatentativerecovery
inthemonthsofOctoberandNovember,growingby1.1per
cent and 1.5 per cent, respectively. Real estate mortgage
lending remains the only
categoryofprivatesectorcreditthatcontinuestodisplayrobustgrowth,risingby7.6
per
centand7.0percentinOctoberandNovember,respectively.
With credit on a declining trend, liquidity levels in the
financial system remained
buoyant(aroundadailyaverageof$3.3billion)formostofOctober2010,driveninpartby
increasednet fiscal injections. BymidNovember,however,on
theheelsof the liquidity
measuresintroducedbytheCentralBank,commercialbanksexcessreservesfelltoadaily
average
of
$1.4
billion
and
further
to
$960
million
in
January
2011.
As
liquidity
tightened,
commercial banks needed to have greater recourse to the
interbank market and to
repurchasestomeettheirfinancingneeds.
In thesomewhat tighter liquidityenvironment,shortterm interest
ratesedgedup
slightlyfromtheirhistoriclows.
Thethreemonthtreasurybillrateroseto0.41percentin
January2011from0.28percentinOctober2010whiletherateonsixmonthtreasurybills
inchedupto0.52percentinJanuaryfrom0.48percentinNovember2010.
Commercial
banksweightedaveragelendingratesfellto10.28percentinSeptember2010from10.58
percentinJune2010.
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Withcoreinflationwellanchoredforthetimebeingandwitharecoveryofactivityin
thenonenergysectorcontinuingtobeanurgentpriority,theBankhasdecidedtoreduce
theReporateby25basispointsto3.50percent.
The Bank will continue to keep economic and monetary conditions
under close
review.
ThenextReporateannouncementisscheduledforFebruary25,2011.
January28,2011
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APPENDIX 1
MOVEMENT OF SELECTED CATEGORIES OF THE INDEX OF RETAIL
PRICES/Percentage Change/
Monthly Year-on-Year
October2010
November2010
December2010
October2010
November2010
December2010
Headline Inflation (1.3) (0.7) 0.5 12.5 12.8 13.4
Food Prices (3.5) (1.9) 1.3 26.7 27.4 29.5
Bread and Cereals 0.2 (0.4) 0.5 (3.1) (2.1) (0.7)
Meat 2.3 (1.9) 4.5 5.2 4.4 9.4
Fish 0.9 0.8 2.1 9.0 10.1 7.9
Vegetables (7.9) 0.7 0.3 37.9 42.0 42.5
Fruits (4.9) (7.5) 1.6 33.4 30.9 32.4
Milk, Cheese & Eggs 0.3 0.2 1.5 9.6 9.2 11.3
Oils and Fats 0.0 0.0 (1.1) (2.6) (2.6) (2.8)
Sugar, Jam,
Confectionery, etc.
0.3 0.0 0.2 6.7 4.2 4.1
Core Inflation 0.3 0.1 (0.1) 4.7 4.8 4.7
Alcoholic Beverages& Tobacco
1.8 3.4 0.1 3.4 6.5 6.0
Clothing andFootwear
0.2 (0.2) (0.8) (0.6) (0.6) (1.5)
Furnishings,HouseholdEquipment andRoutine Maintenance
0.4 0.0 0.0 1.0 1.0 1.0
Health0.4 0.0 0.0 3.9 4.0 3.8Of which: Medical
Services0.2 0.0 0.0 6.0 6.0 6.0
Housing, Water,Electricity, Gas &Other Fuels
0.4 0.0 0.0 0.2 0.2 0.2
Of which: Rent 0.4 0.0 0.0 7.0 7.0 7.0
HomeOwnership
0.6 0.0 0.0 (0.8) (0.8) (0.8)
Education 0.7 0.0 0.0 1.9 1.9 1.9
Recreation & Culture 0.1 0.0 0.0 13.7 13.7 13.7
Hotels, Cafes &Restaurants (0.2)
0.0 0.0 0.8 0.8 0.8
Transport 0.0 0.0 0.0 12.1 12.1 12.1
Source: Central Statistical Office.
