The Central Bank of Trinidad and Tobago (CBTT) is blaming a surge in international commodity prices and inclement weather for a surge in food prices.

According to the Central Statistical Office food inflation (year-on-year) rose from 3.2 per cent in January to 4.9 per cent in July 2021. The largest increases were recorded for vegetables, fruits, milk, cheese and eggs. Core inflation, which excludes food items, remained relatively contained at 1.6 per cent in July 2021, with headline inflation measuring 2.2 per cent.

In the meantime, CBTT has reported that international reserves rose to US$7.0 billion at September 17, 2021 (over eight months of prospective imports), partly due to the inclusion of US$644 million from the International Monetary Fund’s (IMF) general allocation of special drawing rights (SDRs) in late August.

Commercial banks’ unremunerated excess reserves at the Central Bank amounted to TT$8.3 billion (1 TT dollar=US$0.16 cents) in mid-September 2021, up from TT$7.5 billion at the end of March.

Repo rate being maintained at 3.5%

The CBTT has however maintained the repo rate at 3.50 per cent taking into account local developments coupled with a recovering global economy.

Regarding the performance of the domestic economy, the CBTT said that during the second quarter, shortfalls in natural gas availability hampered production of liquefied natural gas and ammonia, while methanol output surpassed levels of the corresponding period of the previous year when several facilities had been shut down.

According to the CBTT, “Nationwide restrictions on movement and on permissible activities in order to curb the spread of the virus severely impacted production and distribution of many non-energy goods and services in recent months. Despite this, improvements occurred in the electricity, water, finance and real estate subsectors. The relaxation of restrictions in the context of higher levels of vaccinations is expected to lead to a resumption in non-energy production in particular construction, distribution and food services – in the final quarter.”

The annual growth rate in credit to the private sector has been positive since April 2021, with some substitution away from consumer and business credit towards real estate mortgage loans. On the business side, there has been a noticeable rise in loans for construction, alongside a decline in financing for services.