The inflation rate in Colombia has hit yet another 16-year high, rising to 8.97% in July compared to 8.60% in June, according to government’s National Administrative Department of Statistics (DANE). Just like last month, this represents the highest level of inflation in the country since October 2000.
Consumer prices jumped 0.52% during the month — even higher than the 0.48% rise in June — with food prices seeing the biggest uptick at 1.11%. This was well above the average analyst expectation of a 0.32% overall rise in Colombia’s consumer price index, although significantly down from the 1.29% and 1.28% seen, respectively, in January and February this year.
A trucker strike that shut down major shipping routes for 45 days this summer is the biggest culprit, along with ongoing weakness in the peso. The lasting effects of a drought attributed to a particularly severe appearance of the El Niño cycle late last year is also still being felt in food prices.
While the rise was higher than expected, analysts and the nation’s central bank agree that Colombia is seeing the worst of this inflation now and are forecasting it to ease in the coming months. Bancolombia, the nation’s largest bank, predicts inflation to finish the year at 6.5%. Spanish bank BBVA has put its forecast at 6.2%. Colombian President Juan Manuel Santos also said today that he expects the rate to begin falling now that the strike and other mitigating factors are in the past.
Officials continue to be surprised at the prolonged increase. Last August, Finance Minister Mauricio Cárdenas said that “I don’t have strong concerns about inflation,” per Bloomberg, and he predicted in June that the central bank had raised the interest rate far enough to combat inflation.
The bank then hiked the rate another 25 basis points to 7.75% — the 11th straight month of intervention — and some have predicted another increase coming when the Banco de la Republica committee votes again later this month. Though the last vote coming in at 4-3 suggests some are opposed to another hike, the central bank has already pushed up the interest rate up 325 basis points since last September in an attempt to combat inflation.
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