Trinidad:
Inflation hits double digits
The Guardian
Trinidad
Guardian
Port
Spain
Petroleumworldtt.com
11 26 06
Three
weeks after Central Bank Governor Ewart Williams
warned that the T&T economy would be on a “slippery
slope” if inflation went into double digits,
the Central Bank reported that the retail price
index rose to ten per cent in October.
In
a statement yesterday, the Central Bank said the
escalating increase in the price of food continued
to be the main driver of inflation.
Food
prices registered an increase of 26 per cent between
October 2005 and October 2006, with vegetable prices
posting an increase of 63.4 per cent in the period
and fruit prices jumping by 19.9 per cent.
There
were also significant increases in the price of
fish (up by 31 per cent) and meat products (up by
12.9 per cent).
Core
inflation, which excludes energy and food prices,
was also sharply higher, recording an increase of
4.7 per cent on a year-on-year basis to October,
up from 3.9 per cent in September.
The
rise in core inflation reflected increases in the
cost of transportation and health services, housing,
hotels, cafes and restaurant as well as the 19 per
cent hike in alcoholic beverages.
Speaking
last night on CNC3, Minister in the Ministry of
Finance Conrad Enill pointed out that over the last
five years, some 18,000 people had gained employment.
“What
that therefore meant is that you had a significant
number of individuals with resources who basically
were demanding goods and services,” said Enill.
Enill
also pointed out that the Government had returned
$1.8 billion to individuals as a result of the reduction
in income taxes in the 2005 budget.
Addressing
the impact of flooding earlier this month, the Central
Bank noted that the Government’s efforts to
increase food supplies to the local market “may
have been temporarily set back by the recent floods,
which destroyed a sizeable portion of cultivated
acreage.”
The
institution admitted that the flooding, as well
as increasing inflationary expectations, “will
continue to exert upward pressure on prices”
which made it all the more important that the Government
restrain its spending.
In
the statement, the Central Bank said it planned
to address the inflation problem by sucking excess
money out of the system and sterilising it.
The
soon-to-be issued $700 million eight-year government
bond represented a first step in implementing this
enhanced liquidity absorption measure, according
to the Central Bank.
“The
proceeds from the bond will be sterilised by the
Central Bank, significantly enhancing liquidity
conditions in the market,” the Central Bank
said.
The
Bank said that it also planned to reduce excess
liquidity by issuing securities of shorter maturities
and by increasing the sale of foreign exchange to
the market.
The
Trinidad Guardian
24th November, 2006
Copyright
©2006 The Trinidad Guardian . All Rights Reserved.
