Trinidad and Tobago’s inflation rate increased from 0.5 per cent year-on-year in May to 0.9 per cent in June, while core inflation, excluding food prices, remained unchanged at 0.3 per cent, the latest figures released by the Central Statistical Office (CSO) have shown.
The Central Bank reported the CSO’s findings in its latest monetary policy announcement on June 28.
It announced the repo rate – the interest rate at which the Central Bank lends money to commercial banks – remained at 3.5 per cent.
Higher food prices were primarily responsible for the upward drift of inflation, the Central Bank reported.
Food inflation accelerated to 3.1 per cent in May compared with 1.1 per cent in April 2024, it said, “on account of price increases for several locally produced and imported food items.”
CSO data showed a year-on-year decline in real gross domestic product (GDP) of 2.3 per cent during the third quarter of 2023, with contraction in the energy sector (-10.3 per cent) offsetting the positive performance of the non-energy sector (1.3 per cent).
The Central Bank said its production monitored during the fourth quarter of 2023 and into the first three months of 2024, including the sale of cement and new motor vehicle sales, “point to vibrancy in some non-energy sectors.
“Meanwhile, data from the Ministry of Energy and Energy Industries indicate that crude oil and natural gas (output) from the mature fields continued to slip over this period.”
It said financial-sector liquidity “remained ample during the second quarter of 2024, in the face of an increase in domestic financing by the government,” adding that commercial banks’ excess reserves at the Central Bank averaged $4.2 billion in the first half of June 2024, marginally lower than in May 2024 ($4.3 billion).
“There was nonetheless some skewness (in commercial banks’ liquidity), leading some institutions to temporarily borrow on the interbank market.”
Private sector credit, it said, “performed favourably,” growing by 6.7 per cent (year-on-year) in April 2024 compared with 7.9 per cent in January 2024.
“Led by robust lending for motor vehicles, the growth in consumer loans (10.2 per cent) surpassed the expansion in business lending (9.5 per cent).”
Interest rates on three-month treasuries in Trinidad and Tobago continued to trend upwards, rising by 27 basis points since February 2024.
The corresponding three-month rate on US treasuries has been relatively stable over the same period.
“In this regard, the TT-US interest differential on three-month treasuries moved to -406 basis points in May 2024 from -432 basis points in February 2024,” the Central Bank reported.
“In its assessment of external economic conditions, the Monetary Policy Committee (MPC) took note of the relative steadiness of global inflation, the likely easing of monetary policy rates, and the geopolitical uncertainties…clouding the international growth outlook.
“Domestically, the low level of inflation and buoyancy of credit were supportive of the ongoing economic recovery
