Central Bank: Price pressures contained

In its latest monetary policy announcement report that was released yesterday, the Bank said the Central Statistical Office’s (CSO) Index of Retail Prices showed that headline inflation slowed slightly to three percent on a year-on-year basis in September from 3.1 percent in August.

Core inflation, which excludes food prices, edged upwards to 2.3 percent in September from 2.2 percent in August. Faster price increases within the health and clothing and footwear sub-indices led the pick up in core inflation.

Food inflation slowed to 6.2 percent by September compared to 7.2 percent in August. After falling in October, liquidity in the financial system rose slightly in November with commercial banks’ excess reserves averaging $3.4 billion daily during the period November 1 to 21, 2016.

The Bank removed $725 million from the system through open market operations. The Bank’s sales of foreign exchange to authorised dealers indirectly extracted roughly $500 million. The latest labour information from the CSO put the country’s unemployment rate at 4.4 percent during the second quarter of 2016 compared with 3.2 percent in the corresponding quarter of 2015. Against this backdrop, the Bank’s monetary policy committee took note of the overall economic conditions, weak inflationary pressures, the current and anticipated trajectory of external interest rates.