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Colombian inflation accelerated to its fastest pace since 2016 last month, putting pressure on the central bank to do more to rein in surging prices.
The annual inflation rate rose to 8.01%, the national statistics agency said Saturday, which compares to the 7.6% median forecast of analysts surveyed by Bloomberg. The pace of consumer price rises is more than double the 3% mid-point of the central bank’s target range. Prices rose 1.6% from a month earlier.
Surging food and energy costs are hitting consumers across all of Latin America. While Colombia is gaining from higher prices for its crude and coal exports, caused by Russia’s invasion of Ukraine, higher costs of gasoline and some foodstuffs will also make the central bank’s task even harder.
Policy makers across Latin America are rushing to withdraw pandemic stimulus, with inflation above target in all the region’s major economies. In Colombia, the central bank has lifted its key interest rate by 2.25 percentage points since September, to 4%, and economists surveyed by the bank expect the benchmark rate to rise to 6.5% by June.
The government is also trying to curb inflation by cutting tariffs to 0% on 165 items, especially on agricultural inputs. Colombia imports wheat, corn, other grains, and Russia is a supplier of fertilizers to the Andean nation.
The central bank will also be helped by the recent peso rally. The currency has strengthened the most in emerging markets since the invasion began, boosted by the higher oil price.
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