In a recent review of Morning, Paramin (Farrar, Straus and Giroux, 2016), Walcott’s final published work, I reflected on how difficult it can be to escape Sir Derek’s titanic shadow.
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Food prices on the rise
Food inflation accelerated to 13.8 per cent in January from12.7 per cent in the previous month due to faster price increases on some items. The latest data from the Central Statistical Office on the Index of Retail Prices shows that vegetables increased to 27.6 per cent from 26.8 per cent in December, meat to 9.6 per cent from 8.5 per cent, oils and fats to 2.8 per cent from 2.7 per cent, and milk, cheese and eggs to 0.9 per cent from 0.3 per cent.
Headline inflation stood at 7.3 per cent in January, slightly up from 7.2 per cent in December 2012. On a monthly basis, headline inflation rose by 2.6 per cent in January following a decline of 0.8 per cent in December 2012.
Core inflation, which excludes food prices, slowed to 2.2 per cent from 3.1 per cent in December. There were slower price increases in most of the major components of core inflation including alcoholic beverages and tobacco (2.5 per cent), clothing and footwear (2.9 per cent), housing and utilities (0.1 per cent), recreation and culture (2.0 per cent), and hotels and restaurants (4.0 per cent).
Costs related to health care and transportation rose faster in January by 6.1 per cent and 3.8 per cent, respectively.
After exhibiting a slow but steady rise, there was an unexpected slowdown in private sector credit towards the end of 2012. On a year-on-year basis, private sector credit granted by the consolidated financial system decelerated to 2.1 per cent last December from 3.8 per cent the previous month. Growth in consumer credit slipped to 2.4 per cent from 3.1 per cent, while business lending declined by 0.8 per cent following a 2.6 per cent rise in November.
However, real estate mortgage lending continued to be robust, expanding by 11.2 per cent in December. The Index also shows that high net domestic fiscal injections contributed to a sharp build up in financial system liquidity last month. Commercial banks’ holdings of excess reserves at the Central Bank climbed to a daily average of $5,132.5 million from $3,432.3 million in January. The inter-bank market was inactive last month as commercial banks were sufficiently liquid to meet all their short-term funding needs.
The Central Bank remained active in the market addressing the excess liquidity situation through open market operations. Sales of foreign exchange to authorized dealers also helped to contain excess liquidity. In the coming months, the Bank intends to step up its efforts to manage the build-up of system liquidity.
Short-term interest rates remained depressed. The rate on T&T Government three-month securities declined from 0.40 per cent in January to 0.24 per cent last month, while the rate on US three-month treasury bills rose from 0.08 to 0.13 per cent. These movements resulted in a narrowing of the differential between TT and US three—month interest rates to 0.11 per cent from 0.32 per cent in January.
The Central Bank said with underlying inflationary pressures still well contained and continuing expectation for a turnaround in economic activity this year, it views its present accommodative monetary stance as appropriate and has decided to maintain the ‘repo’ rate at 2.75 per cent.