May 2006 Financial News

Inflation continues to increase

May 25, 2006

THE CENTRAL Bank has increased the repo rate by 25 basis points to 7.0 per cent.

This, as the latest data released by the Central Statistical Office, suggests that inflation continues to be a major economic challenge.

"On a year-on-year basis to April, headline inflation nudged up to 6.9 per cent from 6.6 per cent in March. The increase in food prices measured 19.4 per cent, roughly unchanged from last month.

"However, core inflation year-on-year posted an increase of 3.1 per cent, up from 2.7 per cent last month," the Bank has said.

The Bank noted that there was continuing evidence that demand pressures may be straining available absorptive capacity in the economy.

One indicator is the substantial increase in housing costs over the last quarter.

Increases in lending rates are only now beginning to dampen credit demand-the year-on-year increase in credit to the private sector slowed to 15.7 per cent compared with 21 per cent at the end of last year, it added.

Not withstanding, expenditure shortfalls compared to budget, the non-energy deficit for the first half of the fiscal year was 56 per cent higher than in the corresponding period of the previous fiscal year-this increase constitutes a major source of liquidity injection.

The Daily Express
Thursday, May 25, 2006.
http://www.trinidadexpress.com/index.pl/article_news?id=160953214