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Why is the country the only one in the region where inflation continues to rise?

Why is the country the only one in the region where inflation continues to rise?

The Colombian inflation accelerated less than expected last montheasing pressure on the central bank to extend its steepest series of interest rate hikes.

(Read: There is no precedent for central banks successfully controlling inflation.)

He consumer price index rose 13.25% in Januaryor from a year earlier, the highest since 1999, the statistics agency said on Saturday. The result was below the 13.3% median forecast of 21 economists in a Bloomberg survey.

Prices increased by 1.78% compared to the previous month. The increase was led by the ctransportation costs, restaurants and hotels, and food prices. Core inflation, a measure that excludes the most volatile items in the consumer basket, advanced 10.43% compared to the same month of the previous year.

Price increases to the Colombian consumer sThey are the fastest among Latin American economies that target inflation. It is the only nation among its peers where prices continue to accelerate.

(Also: The factors that would drive investors away from Colombia).

The central bank has raised interest rates by 11 percentage points to 12.75% over the past year and a half, in its biggest cycle of interest rate increases. Before the board’s decision to raise interest rates by 0.75 percentage points last month, economists predicted a 13% end of the cycle.

The central bank forecasts that inflation will slow to 8.7% by the end of the year and 3.5% by the end of next year. The bank targets inflation at 3%, plus or minus one percentage point.

Inflation may continue to rise in the first quarter, particularly core inflation, as prices remain under upward pressure due to high inflation indexing in 2022 and rising costs“, says the economist Felipe Hern√°ndez.

(Also: More consumption and less savings will keep inflation and rates rising).

“Reducing gasoline subsidies will also contribute to food inflation due to base effects and waning shocks may provide some relief,” the expert points out.

In an attempt to alleviate inflation, President Gustavo Petro froze highway tolls last month and said that it would intervene in the regulatory commissions that set the rates of public services.

Bloomberg

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Written by Editor TLN

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