Food prices dive T&T inflation to 14.8%

The Central Bank of Trinidad and Tobago announced on Friday that the annual inflation rate at the end of September was 14.8 per cent, more than one full percentage up from the previous month when it was 13.5 per cent.

The bank said the rising cost of food continues to drive up inflation.

If food is taken out of the equation the core inflation rate shows a decline from 6.3 per cent in August to 6.2 per cent by the end of last month.

But food by itself showed a dramatic rise reaching 34.6 per cent from 30.2 per cent in the previous month.

• Bread and cereals were up by 63.2 per cent
• Fruits climbed 38.4 per cent
• Vegetables increased by 42.4 per cent
• Fish, rose 25.1 per cent

The bank says the inflation outlook for the next several months is uncertain noting that several factors locally and globally would affect how the economy performs.

One of the factors that drives up inflation is wage increases. The bank is concerned that "current indications point to a significant increase in wage demands in both the public and private sectors to compensate for rising food inflation."

The bank is hopeful that a continued reduction in global commodity prices would eventually reduce the prices of some imported staples.

"Moreover, higher imports from Guyana as well as the 'coming-on-stream' of production from the Tucker Valley farm should also boost domestic agricultural supplies in the near future," it says.

In order to deal with the problem of rising inflation the bank says it will continue to take steps to increase liquidity absorption and dampen bank credit expansion.

To do this it is increasing the cash reserve requirement for commercial banks to 17 per cent from 15 per cent of prescribed liabilities from November 5, 2008.