T&T inflation down to 8.4%; food inflation 16.5%

The Central Bank reported Friday that the annual rate of inflation in Trinidad and Tobago is down to its lowest point in a year.

In a news release the bank said headline inflation was 8.4 per cent in June from 10.3 per cent in May, the first time in 12 months that the rate has reached a single-digit figure.

If food inflation is removed from the calculation the figure looks better at 4.5 per cent in June from 5.8 per cent in May. June had the best performance in 17 months, the bank said.

It explained that "The reduction in inflation is largely attributable to lower international commodity prices as well as to the compression in domestic demand arising from the marked slowdown in the local economy."

It added that the rise in the unemployment rate to 5.0 per cent in the first quarter of 2009 and the "sharp deceleration in bank credit growth" also contributed.

But the bank cautioned that it is not yet certain "whether inflation expectations have been fully reversed...there is always a risk that domestic agricultural prices could increase in the coming months in the face of inclement weather."

It's good news for consumers who are now paying less for basic foods items as well as other services such as health care and housing. But food inflation remains high, despite some significant reductions.

It dropped from 20 per cent in May to 16.5 per cent in June. And many consumers report that while it looks good for the economists and politicians they are not seeing the difference.

According to the bank, between June 2008 and June 2009, the country recorded slower year-on-year price increases for several food items:

• bread and cereals - 12.5% compared with 20.4%in May
• meat - 7.1% compared with 8.3% in May
• oils and fats 14.5% compared with 18% in May
• fruits - 36.7% compared with 41.1% in May
• sugar, jams and confectionery - 7.4% compared with 11.3% in May)

Vegetable prices are also down:

• Tomatoes: $8 from $10 a pound. Some vendors are offering four pounds for $20
• Cucumber: $3 from $5 a pound
• Melongene: $3 from $5
  
• Caraille: $2.50 from $4 a pound

Lettuce and pumpkin prices remain high, according to some vendors who say it's because of a drop in supply. Many farmers expect prices will remain unstable, saying the weather will determine supply, which in turn will affect prices.