The Central Bank has reported increases in several areas including headline, core and food inflation rates over the past month.
In its latest monetary announcement, it said headline inflation rose to 5.1 per cent year-on-year in April 2022, when compared with 4.1 per cent a month earlier.
Food inflation rose to 8.7 per cent from 7.9 per cent. Higher prices were recorded in rice, margarine, edible oils and meat; while core inflation increased to 4.1 per cent from 3.2 per cent partly due to the adjustment to domestic fuel prices.
Building materials prices, the Central Bank said also had relative significant increases, especially on imports.
It also reported some improvements areas owing to the windfall from the Russia-Ukraine conflict, but said while the future remained uncertain, such price developments have benefitted Trinidad and Tobago’s fiscal and external accounts.
“High energy prices have persisted despite the gradual pick up in supplies from OPEC+. Crude oil prices moved from an average of US $108.49 per barrel in March 2022 to US $120.93 per barrel in mid-June 2022.
“Natural gas prices have been equally robust, rising from US $4.88 per mmbtu to US$8.96 per mmbtu over the same period.
It pointed out that energy output for the first quarter of 2022 has been mixed on a year-on-year basis, with crude oil increasing by 2.2 per cent while natural gas and petrochemicals declined by 5.6 per cent and 6.2 per cent, respectively.
Within the non-energy sector there has gradual recovery, the Central Bank said, after the covid19 restrictions were all lifted in 2022.
“Business lending continued to accelerate, expanding by 7.4 per cent in March 2022, and driven by increased loans to the construction 17.5 per cent, manufacturing 12.3 per cent and other services 10.9 per cent sectors.
“Meanwhile, the fall in consumer lending appeared to have bottomed out in March 2022, signaling that a return of consumer demand to pre-pandemic levels may be on the horizon.
“In particular, credit card loan growth turned positive of 0.8 per cent in March after falling off since the onset of the pandemic. Financial system liquidity remains ample, with commercial banks’ excess reserves at the Central Bank averaging $5.3 billion in early June 2022.”
But despite reopening the economy, it said data from the Central Statistical Office showed the unemployment rate started to trend down earlier, reaching 5.4 per cent in the third quarter of 2021, from 7.2 per cent high at the end of 2020.
“At the same time, this rate was higher than the 4.7 per cent published for Q2 2021 and may incorporate some decline in the number of people in the labour market as opposed to just new jobs.”
The Central Bank said even though the global economic trends were less than upbeat due to the Russia-Ukraine conflict and ongoing recovery from the covid19 pandemic, it has taken the decision to maintain the repo rate at 3.50 per cent.
In assessing the evolving global financial environment alongside the specific developments in TT and the short to medium term outlook, it said higher international interest rates were already being reflected in interest differentials.
The Central Bank explained that US three-month treasuries were about 73 basis points higher than equivalent domestic instruments in May 2022 and international inflation spilled over to TT was expected to continue upward.
“A number of central banks have reversed course and raised interest rates; monetary authorities in Japan and China, however, have not followed suit, prioritising support for domestic recoveries.
“Recent volatility in global stock markets has been exacerbated by concerns that sharply higher interest rates could plunge some economies, including the United States, into recession.
“At the same time, the impulses to domestic prices were currently externally generated and the statistics on credit and real sector activity pointed to a recovery that was underway but yet to be firmly established.”