Jan 2013 Financial News

Inflation down to 7.2 percent

Jan 28, 2013

FINAL inflation figures released by the Central Statistical Office (CSO) for 2012 show that headline inflation, which is driven by food prices, fell to 7.2 percent in December from 8.1 percent in November and a high of 12.6 percent in May.

This information is contained in the latest repo rate announcement from the Central Bank which was released yesterday. In this announcement, the first for 2013, the bank said headline inflation for the whole of last year averaged 9.3 percent, up from 5.2 percent in 2011.

The bank said Government’s decision on November 15, 2012 to remove Value Added Tax (VAT) on several food items had a partial effect on slowing down food prices last month. There were slower price increases for bread and cereals ( 0.7 percent compared with 1.4 percent in November); meat (8.5 percent compared with 10.3 percent); fish (8.2 percent compared with nine percent); milk, cheese and eggs (0.3 percent compared with 0.4 percent); oils and fats (2.7 percent compared with 6.1 percent) and sugar and confectionery products (1.8 percent compared with 2.7 percent).

The increase in vegetable prices decelerated to 26.8 percent in December from 28.1 percent in the previous month after having peaked at 45 percent in May. Fruit prices decelerated markedly over the course of last year, from a high of 62.1 percent in January to 2.8 percent in December. Core inflation, which does not include the impact of food prices, remained unchanged at 3.1 percent in December. Slower year-on-year increases were recorded for alcoholic beverages and tobacco (3.1 percent); health (5.6 percent); clothing and footwear (3.1 percent) and recreation and culture (5.1 percent). The bank said: “The steadiness in the core inflation rate suggest that underlying inflationary pressures are still relatively subdued.”

Private sector credit continued to rise moderately during the final-quarter of 2012. On a year-on-year basis, private sector credit granted by the consolidated financial system increased by 3.8 percent in November, up from 3.7 percent in October. There was a pick-up in credit in all major lending categories in November 2012.

Consumer credit rose by 3.1 percent (year-on-year) in November compared with an increase of 2.9 percent in October while business lending regained some traction, rising by 2.6 percent in November, following a slowing of growth to one percent in September. Real estate mortgage lending continued to grow at a robust pace, increasing by 11.3 percent in the 12 months to November 2012.

Modest private sector credit demand and high net fiscal injections contributed to elevated levels of liquidity in the financial system. Commercial banks’ reserve balances at the Central Bank in excess of the statutory requirements rose to a daily average of $4 billion in December from $3 billion in November. The next repo rate announcement is scheduled for February 28.


Source:
Newsday
Saturday January 26, 2013

http://www.newsday.co.tt/business/0,172573.html