Controlling Inflation

INTRODUCTION

Of the various ills the economy can face, inflation is simultaneously the worst for society as a whole. Inflation can be defined as the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling (investopedia.com). Inflation is a sustained increase in the general level of prices. Since inflation is concerned with increases in the general level of prices, changes in the price of a single good or service cannot be characterized as inflation. The inflation rate is normally measured by percentage changes in the cost of a basket of consumer goods and services (central bank). Inflation in Trinidad has been fluctuating, as stated in the article Inflation rises to 5 per cent, found in the Saturday Guardian on the 27th February, 2010.
The article gave the information given in the report done by the Central Statistical Office; it stated that headline inflation rose by 3.7 per cent in the 12 months to January 2010 from the 1.3 per cent a month earlier. Food price inflation rose by 2.7 per cent on a year on year basis in January following a decline of 0.2 per cent in December 2009. Core inflation which excludes the impact of food prices, rose to 4.2 per cent (year on year) in January from 2.2 per cent in December. On a monthly basis, core inflation rose by 2.2 per cent in January 2010, following an increase of 0.1 per cent in December 2009 and three consecutive monthly declines.
So we clearly see that inflation is present in the economy, and from the article it is quite unpredictable. What we need to ask ourselves is how we can deal with inflation? What we can do to make inflation easier? What can the government do what will the Central Bank do to deal with inflation?

THE QUESTION

INFLATION IS ON THE RISE, SO WHAT CAN BE DONE BY THE CENTRAL BANK OF TRINIDAD AND TOBAGO TO CONTROL INFLATION?

LIMITATIONS/ CHALLENGES

- My first challenge was that it was quite difficult to find an... [continues]

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