Headline Inflation falls to 3.9 per cent

According to the article below, headline inflation is down to 3.9 per cent in May and the major reason for this is the drop in food inflation from 15% in April to 8.2% in May. Is the Central Bank trying to pull the wool over the eyes of the citizens? Has anyone experienced a decline in food prices? Because I certainly haven't...

HEADLINE INFLATION RATE FALLS TO 3.9 PER CENT:

CENTRAL BANK MAINTAINS ‘REPO’ RATE AT 3.25 PER CENT

Recent data released by the Central Statistical Office indicate that inflation continued on a downward trajectory in May for the fifth consecutive month.  On a year‐on‐year basis, headline inflation slowed to 3.9 per cent in May from 6.4 per cent in the previous month. Headline inflation is now at the lowest level since January 2010 when the rate measured 3.7 per cent. On a monthly basis, the Index of Retail Prices fell by 0.4 per cent in May following an increase of a similar magnitude in the previous month. Core inflation, which excludes the impact of food prices, measured 1.3 per cent (year‐on‐year) in May, the same rate as in the previous month.

The marked slowdown in headline inflation is due, in large measure, to the sharp decline in food inflation which fell to 8.2 per cent in May from 15.0 per cent in April. This decline reflected the “base effect” associated with the surge in food prices in May 2010 as well as the 1.0 per cent decline in food prices during the month of May 2011. On a monthly basis, the fall in prices in May for fish (‐6.7 per cent), vegetables (‐2.5 per cent) and sugar and confectionery products (‐0.2 per cent) compensated for price increases in other major food groups such as oils and fats (2.9 per cent), fruits (4.8 per cent), bread and cereals (0.6 per cent) and meat (0.4 per cent).

The Bank continues to be cautious about the outlook for domestic inflation given the steady increase in the global price of some key grains such as corn and soya meal which are major inputs in some main domestic food groups such as dairy products and poultry. Over the last four months, credit conditions in the financial system have shown incipient signs of a weak recovery.  In the twelve months to April 2011, private sector credit extended by the consolidated financial system fell by 0.8 per cent (year‐on‐year) following declines of 1.4 per cent in March and 2.3 per cent at the start of the year. Within the financial sector, commercial bank lending to the private sector rose by 1.6 per cent in April (year‐on‐year) while credit extended by non‐bank financial institutions recorded a 13.3 per cent decline.

Both consumer credit and real estate mortgage lending have been the major drivers behind the improvement in overall credit, growing by relatively robust rates of 6.7 per cent and 8.8 per cent, respectively in the twelve months to April 2011. Business lending still remains relatively sluggish and declined for the eighteenth consecutive month by 5.9 per cent.

In recent months, lower net fiscal injections along with the liquidity absorption measures employed by the Central Bank have helped to reduce liquidity in the financial system. In June, actions by the Central Bank in the government securities and foreign exchange markets withdrew approximately $125 million from the financial system. Commercial banks’ excess reserve balances at the Central Bank have averaged $1.3 billion in June so far compared with $2.0 billion in December 2010.    As liquidity conditions tightened, some commercial banks tapped the inter‐bank market as well as the ‘Repo’ window at the Central Bank to meet their short‐term funding requirements.

In the somewhat tighter liquidity environment, short‐term interest rates continued to increase with the yield on 3‐month treasury bills rising to 0.98 per cent in June, up from 0.68 per cent in May and 0.47 per cent in April.  As a consequence, the differential between local and US short‐term interest rates widened to 93 basis points in June from 62 basis points in May.

With the recovery in credit gaining steady momentum and with underlying inflationary pressures remaining well contained for the time being, the Bank has decided to maintain the ‘Repo’ rate at 3.25 per cent.

The Bank will continue to keep economic and monetary conditions under close review.

The next ‘Repo’ rate announcement is scheduled for July 29, 2011.
June 24, 2011.

Source: Central Bank of Trinidad and Tobago

Idiots' (PNM's) Dilema

'Improve water supply or maintain cheap gas?'
Govt's $2b dilemma

Juhel Browne

Source: Trinidad Express

Monday, January 21st 2008

Motorists could find themselves paying more for gasoline and diesel at the pump sometime in the not too distant future but Energy Minister Conrad Enill says they are already doing so out of their taxes anyway.

In an interview yesterday, Enill said the Government was in the early stages of examining the possibility of a reduction in the $2 billion a year State subsidy on gasoline and diesel which is paid for out of the taxes it collects.

He said the Government had no choice but to deliberate the matter given the record high price of oil that was now hovering at around US$90 a barrel. (Pull up dey selectah! You now bawl oil selling at a record high price and you saying that the Government can no longer pay for the subsidy on gasoline and diesel? Conrad Enill even more stupid than he looks! If the oil selling at record high prices, it would stand to reason that the Government was making more money and would therefore be able to subsidise a whole lot more than just fuel. These people take we for idiots or something? All they will be doing is making inflation higher than it already is if they take of the subsidy on transportation fuel. I'm sure you all remembered what happened when the PNM raised the price of transportation fuel. The price of basically all consumer items, including the price of food on the whole, went up, up, up! So what it is the PNM really trying to accomplish by doing this? Make the rich richer and the poor poorer (or dead) perhaps?)

"We are conducting a preliminary examination of the issue in relation to expenditure in other areas of the economy," Enill said.

"A subsidy simply says that instead of the people getting it in increased taxes, they are getting it in reduced fuel. They are paying for it (increased fuel cost)," Enill also said.

Enill's comments followed Trade and Industry Minister Keith Rowley statement in the Parliament last Friday that the time had come for the Government to reconsider the subsidy in light of record high global oil prices as it was buying oil at the international price to keep the State-owned refinery's operating at full capacity. (Ah yes, let the poor man suffer some more. Goverment making billions when they sell oil and gas so let the poor man suffer some more.)

The fuel subsidy has been the sole protection to drivers in Trinidad and Tobago from the negative effects of any fluctuations in the international oil markets.

In Trinidad and Tobago it now costs drivers TT$3 per litre to fill up the tank of a gasoline fuelled vehicle.

In nearby Barbados, the cost of filling up the tank of a gasoline vehicle is BDS$2.30 (TT$7.21) per litre. (Yeah man you keep quoting figures. You ever notice the PNM always quotes figures that make them look good? Why not quote the price of gasoline from a nation that produces oil and gas, eh Enill?)

Enill said the record high oil prices are forcing the Government to make some hard choices regarding the use of subsidies and gave the example of the ambitious restructuring plans for WASA which is projected to cost a total of US$2 billion (TT$12.5 billion).

Prime Minister Patrick Manning had said that his administration "had no option" but to review water rates given the $1 billion annual subsidy the State pays for the supply of water.

"The gas subsidy is now at $2 billion. The government now finds itself having to answer a particular question," Enill said.

"Is the $2 billion a year better provided to water supply for everybody or for cheap gas and continuing the situation where people can travel at a very low cost." (Well considering the fact that the high-density-PNM-supporter zone of Lavantille doesn't pay for water, lights, telephone or rent for that matter. The more logical choice would be to increase water rates, since this would have little or no effect on the PNM heartland.)

He said, however, said the issue was really one of economic policy that was being discussed within the Finance Ministry and he was only speaking from the standpoint of the energy side of the equation.

"Right now, we have an increase in oil prices and, therefore, the increase in oil prices is going to find itself in the finished product.

So the question is not about increases in prices, the question is about the use of the subsidy it is not about price increase. Prices are increasing, so the subsidy is increasing," Enill also said.

Well it seems that the PNM wants the already ready high rate of inflation to rise further and cause poor people in this country to suffer more than they already are. Now the poor PNMites don't have a problem with this because they are accustomed to living in sordid squalor and they have programmes such as CEPEP, URP and the PNM Smart-man Card, which they benefit from. And if these aren't sufficient, there is always some unsuspecting, working class citizen, ready and available to rob due to the lack of T&T having a working Police Service.