One of the pos­i­tives that the T&T econ­o­my has go­ing for it is that the rate of in­fla­tion for most of this year has been much low­er than the sev­en per cent that Min­is­ter of Fi­nance Win­ston Dook­er­an es­ti­mat­ed in the 2012 bud­get.In pre­sent­ing the bud­get, Mr Dook­er­an an­tic­i­pat­ed an av­er­age in­fla­tion rate of sev­en per cent along with a pre­dic­tion of re­al GDP growth of 1.7 per cent.In Jan­u­ary this year, head­line in­fla­tion, mea­sured by the 12-month in­crease in the In­dex of Re­tail Prices, was 12.5 per cent. But this rate de­clined to less than one per cent in June and again in Au­gust.

Last Fri­day, the Cen­tral Bank, re­port­ing on da­ta pro­vid­ed by the Cen­tral Sta­tis­ti­cal Of­fice, re­vealed "a slight pick-up in do­mes­tic in­fla­tion in Sep­tem­ber" with prices ris­ing by 2.5 per cent when com­pared with the pe­ri­od 12 months ear­li­er. Ac­cord­ing to the Cen­tral Bank, "The in­crease in food prices was large­ly re­spon­si­ble for the pick-up in the head­line in­fla­tion rate. On a year-on-year ba­sis to Sep­tem­ber, food in­fla­tion rose by 4.3 per cent af­ter de­clin­ing by 0.3 per cent in Au­gust."There is a feel­ing that one of the fac­tors dri­ving the in­crease in food prices is that high­er in­ter­na­tion­al prices may have be­gun to im­pact sev­er­al cat­e­gories of the do­mes­tic food bas­ket-as the Cen­tral Bank has been pre­dict­ing would be the case for some months now.

It is es­ti­mat­ed that bread and ce­re­als in­creased by 6.2 per cent in Sep­tem­ber and that milk, cheese and eggs cost on av­er­age 8.4 per cent more than a year ago.If in­ter­na­tion­al prices are prompt­ing the mark-up of im­port­ed goods such as milk, cheese and ce­re­als, the ev­i­dence is that these in­creas­es should be a tem­po­rary phe­nom­e­na as the in­ter­na­tion­al prices of most of the com­modi­ties that the coun­try im­ports are in de­cline.The Food and Agri­cul­ture Or­gan­i­sa­tion of the Unit­ed Na­tions pub­lish­es a month­ly food price in­dex. The most re­cent in­dex, pub­lished in Sep­tem­ber, in­di­cat­ed a de­cline of two per cent com­pared with Au­gust. Sub-in­dices, such as the ce­re­al price in­dex, record­ed a three per cent de­cline in Sep­tem­ber with the in­di­ca­tions be­ing that, ex­cept for Au­gust, "the in­dex has fol­lowed a down­ward trend since April, large­ly on ex­pec­ta­tion of a strong re­bound in world ce­re­al pro­duc­tion. There was al­so a de­cline in the oils/fats price in­dex.

As not­ed in this space pre­vi­ous­ly, there has been a ten­den­cy in this coun­try for re­tail­ers of im­port­ed food prod­ucts to be quick to ad­just their prices up­wards when glob­al in­put prices have in­creased, but much slow­er to re­act when the trend of glob­al prices is in de­cline.Again, we call on the Prices Com­mis­sion to step out of the shad­ows and is­sue some guid­ance to shop­pers and to the re­tail­ers in terms of the knock-on im­pact of in­ter­na­tion­al prices.Main­tain­ing a con­sis­tent in­fla­tion rate of less than three per cent is some­thing that would great­ly as­sist in the re­cov­ery of the lo­cal econ­o­my as it will serve to mod­er­ate the de­mands by trade unions for dou­ble-dig­it wage in­creas­es.A con­sis­tent­ly low in­fla­tion rate would al­so en­sure that the in­comes of those at the low­er end of the scale and the thou­sands of re­tirees liv­ing on fixed in­comes will not be dec­i­mat­ed by an es­ca­lat­ing in­fla­tion rate.Low in­fla­tion al­so al­lows po­ten­tial in­vestors to be con­fi­dent that lo­cal price spikes are not like­ly to dam­age their cost pro­jec­tions.And, fi­nal­ly, if T&T man­ages to cap its in­fla­tion rate at a low lev­el, the Cen­tral Bank will be much less like­ly to be tempt­ed to start think­ing about hik­ing in­ter­est rates.