If you believe you have seen a marked increase in your grocery bill over the last year, then the Central Bank says you are not imagining it.
According to the Central Statistical Office (CSO), this country’s food inflation percentage rose by more than 50 per cent when compared to the same period last year.
Earlier this week the Kiss Baking Company announced that it would be raising the price of a slew of their bread products.
And on the heels of that, the KC Confectionery Ltd announced that from today it would also be increasing the price of its candies.
In a media release yesterday, KC’s chief executive officer Dr Rollin Bertrand said that the decision had become necessary due to rising raw material costs.
“As you are aware, the COVID-19 pandemic has significantly disrupted lives and livelihoods all over the world as well as our beloved country of Trinidad and Tobago, severely impacting supply chains, labour, freight, shipping charges and material costs,” Bertrand said.
Bertrand said KC absorbed these increase costs but now they are unable to do that any more.
“Over this period, all our raw material pricing were increased, however this month we were advised of a 90 per cent increase in one of our major raw material inputs due to shortages and logistic disruptions brought on by the pandemic,” he said.
The Central Bank in its Monetary Policy Announcement released yesterday said food inflation (year-on-year) rose from 3.2 per cent in January to 4.9 per cent in July 2021, according to the latest information from CSO.
The CSO said the largest increases were in vegetables, fruits, milk, cheese and eggs.
The CSO also noted that 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.
But, the Central Bank warned, these could rise further in coming months in light of recently announced increases in transportation fares.
The Central Bank explained that supply-side factors—notably a surge in international commodity prices such as sugar, wheat and vegetable oils; higher shipping costs; transportation delays; and adverse weather conditions—have led to a discernible increase in food prices locally.
Further, the bank said 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.
It also added that nationwide restrictions on movement and on permissible activities to curb the spread of the virus severely impacted production and distribution of many non-energy goods and services in recent months.
Despite this, the Central Bank said improvements occurred in the electricity, water, finance and real estate subsectors.
Additionally, 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 bank forecasted.
According to the bank, monetary and financial indicators point to ample liquidity and signs of an incipient recovery in credit demand in some sectors.
It said commercial banks’ unremunerated excess reserves at the Central Bank amounted to $8.3 billion in mid-September 2021, up from $7.5 billion at the end of March.
Also, 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, the bank said.
On the business side, it noted that there has been a noticeable rise in loans for construction, alongside a decline in financing for services.
With respect to interest rates, the TT/US differential on three month treasuries stood at 28 basis points at the end of August, compared to 30 basis points at the end of May, the bank said.
Further, it said the differential on 10 year instruments increased from 321 basis points to 351 basis points between May and August.