Trinidad inflation causes concern

By Tony Fraser, Associated Press Writer  |  April 22, 2008

PORT-OF-SPAIN, Trinidad --Rising inflation in Trinidad and Tobago is raising concern about one of the Caribbean's strongest economies.

Central Bank Governor Ewart Williams warned Monday night that the oil- and gas-rich country must reduce public spending, counter an increase in consumer credit by banks and invest more in agriculture to battle an annual inflation rate that has risen to 9.4 percent.

"We're facing an inflation rate that could get out of control," Williams told reporters in the capital, Port-of-Spain.

Inflation at the close of 2007 stood at 7.6 percent in Trinidad and Tobago, the fifth-largest exporter of liquid natural gas in the world and the single largest supplier to the United States.

The central bank says the rate has hit 2 percent a month at times this year -- the quickest rise in five years.

Food costs have increased by more than 20 percent since 2005 in the Caribbean nation. High global fuel prices are compounding the problem, Williams said.

But Williams rejected a proposal to subsidize staples, such as rice and flour, for low-income earners.

"If you subsidize the price of flour, everybody buys flour," he said, adding that a food stamp program for poor families would better ease inflationary pressures.