Inflation Hits 8.97% in Colombia, Another 16-Year High
The inflation rate in Colombia has hit yetĀ another 16-year high, rising toĀ 8.97% in July compared to 8.60% in June, according to government’sĀ National Administrative Department of Statistics (DANE). Just like last month, this representsĀ the highest level of inflation in the country since October 2000.
Consumer prices jumped 0.52% during the month ā even higher than the 0.48% rise in June ā with food pricesĀ 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,Ā analysts and the nation’s central bank agree that ColombiaĀ is seeing the worst of this inflation now andĀ are forecasting it toĀ 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 atĀ 6.2%. Colombian President Juan Manuel Santos alsoĀ 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 theĀ prolonged increase. Last August, Finance Minister Mauricio CĆ”rdenas said that “I donāt have strong concerns about inflation,” per Bloomberg, and heĀ predicted in JuneĀ 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% ā the 11th straight month of intervention ā and some have predicted another increaseĀ coming when the Banco de la Republica committeeĀ votes again later this month. Though the lastĀ vote coming in atĀ 4-3 suggests some are opposed to another hike, the central bankĀ has already pushed up the interest rate up 325 basis points since last September in an attempt to combat inflation.
Photo Credit:Ā f3rn4nd0