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With the first week of the most euphoric month of the year comes the worrying inflation data in the main Latin American economies, although not all have revealed what the rate was for the month of November, the data for October, in general, exceeds the immediately preceding months. The trend continues its upward path and some governments do not want to tighten monetary policies for fear that the recession will hit this side of the world.
Everything indicates that many Latin American countries will end the year with the highest inflation rates in decades.
Although, broadly speaking, the increase in the cost of living is attributed to the consequences of the war in Ukraine, which brought problems in the supply chains and the havoc in the main economies due to the Covid-19 pandemic, the internal management of each country continues to be reflected in the numbers that month by month account for the Consumer Price Index (CPI).
Grouping the countries that register the highest inflation data, it becomes clear that only three of them have single-digit inflation: Mexico, Peru and Brazil, either because they have sustained it within that margin or because they managed to reduce it in the last semester; The rest must face the threatening double digits of their economies and some are even reaching triple digits (as is the case in Venezuela), or are on their way to reaching them by the end of the year, as could happen in Argentina.
Inflation continues its upward path in the region
Although some governments welcomed the October inflation data, November brought some surprises. Peru registered annual inflation of 8.45% in November, compared to the 8.28% it had reported in October; The same path was taken by the Colombian economy, when in November inflation stood at 12.53% compared to 12.22% the previous month, which means that the figure was the highest in the last 23 years.
And it is precisely in that country, where the president, Gustavo Petro, publicly asked the Central Bank of the Republic, at the beginning of October, not to toughen the economic policies that could affect the pocket of Colombians. Central banks regularly increase interest rates to discourage consumption and thus cool down the economy, but the president, who is an economist, assures that this will only cause the recession that is forecast for Europe and the United States to reach Colombia.
The real intention of raising domestic interest rates, contrary to our proposal, has to do with avoiding capital outflows due to the rise in US interest rates. It could be avoided with a transitory tax on remittances to swallow capitals.
— Gustavo Petro (@petrogustavo) October 5, 2022
Venezuela had a decrease in year-on-year inflation data from the beginning of the year to July, when it stood at 137.1% per year, compared to the 472% it had reported in January; however, from August to October, the CPI once again took an upward path.
Meanwhile, the contrast is in the region’s strongest economy: Brazil. In that country, since June the annual inflation data have been reduced month by month. In June it reached 11.89% year-on-year, while in October, its most recent data, reflects that the CPI reached 6.47%, taking pressure off the pockets of Brazilians.
With EFE and local media.
