Colombian inflation accelerated less than expected last month, easing pressure on the central bank to extend its steepest-ever series of interest rate rises.
(Bloomberg) — Colombian inflation accelerated less than expected last month, easing pressure on the central bank to extend its steepest-ever series of interest rate rises.
The consumer price index rose 13.25% in January from a year earlier, the highest since 1999, the statistics agency said Saturday. The result was below the 13.3% median forecasts of 21 economists in a Bloomberg survey. Prices gained 1.78% from the month earlier.
The increase was led by transportation costs, restaurant and hotels, and food prices. Core inflation, a measure that excludes the most volatile items of the consumer basket, advanced 10.43% from the same month a year earlier.
Colombia’s consumer price rises are the fastest among Latin American economies that target inflation. It is the only nation among its peers where prices continue to accelerate.
The central bank has raised interest rates by 11 percentage points to 12.75% over the last year and a half, in its biggest-ever interest rate hiking cycle. Before the board decision to lift interest rates by 0.75 percentage points last month, economists predicted an end of the cycle at 13%.
The central bank forecasts that inflation will slow to 8.7% by year end, and to 3.5% by the end of next year. The bank targets inflation of 3%, plus or minus one percentage point.
Read more: Colombia Signals Interest Rate Rises Nearing an End
What Bloomberg Economics Says
“Inflation may continue rising in the first quarter, core inflation in particular, as prices remain under upward pressure from indexation to high inflation in 2022 and increasing costs. Waning gasoline subsidies will also contribute. Food inflation due to base effects and waning shocks may provide some relief.”
— Felipe Hernandez, Latin American economist
In a bid to ease inflation, President Gustavo Petro last month froze road tolls and said he would intervene in the regulatory commissions that set public service fees.
Read more: Petro Plan to Cut Utility Bills Sinks Colombia Power Companies
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