The increase in energy and food prices have a negative effect on the well-being of familiesmainly those of lower income because by devoting most of its resources to food purchase are more likely to fall into poverty.
Moody’s expects inflation in 2022 to be above the central bank targets of the largest Latin American economies: Brazil, Mexico, Colombia, Chile and Peru.
“The monetary politics in Latin America it leaned towards tightening earlier than in other emerging economies and much earlier than in advanced economies. Therefore, we expect benchmark rates to continue rising until inflation begins to convincingly decline towards target ranges,” Moody’s said.
The high prices of energy and food will remain high as long as the war conflict Come in Russia and Ukraine. And it is that the farmers of Latin America also depend to a great extent on the fertilizers that Russia exports.
Globally, bottleneck in the supply chains and the high prices of raw Materials will continue to pressure inflation.
The cost of transportation of goods by sea has increased up to 12 times since autumn of last year. Moody’s estimates that it will be difficult for interest rate increases alone to lower global inflation.
“It is doubtful that aggressive policy rate increases alone will effectively reduce inflation to target ranges, but these increases are likely to remove some of the excess money supply that was added to financial systems in 2020 to offset the liquidity crisis during the COVID-19 crisis,” he said.
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