Inflation in Colombia forecast to rise to 9.5%

Financial Business - Securities

Wednesday, May 3, 2023 13:30 (GMT+7)
13:30 5/3/2023

The Central Bank of Colombia (BCC) forecasts that inflation in the country in 2023 will reach 9.5%, 0.8% higher than previously estimated.

Colombia's Central Bank raises 2023 inflation forecast to 9.5%. Photo: Luisa Gonzalez .

According to Reuters , analysts at the Central Bank of Colombia yesterday (May 2) raised their 2023 inflation forecast amid continued increases in consumer prices, which could prompt the bank's Board of Directors to raise its benchmark interest rate beyond market expectations.

Specifically, analysts revised their inflation forecast for this year to 9.5%, from a previous estimate of 8.7%, adding that they expect Latin America's fourth-largest economy to grow 3% in the first quarter.

In the Colombian Central Bank's quarterly monetary policy report, the research team also pointed out that the continued high prices this year and next year are mainly due to higher fuel prices. Other factors include a weaker peso.

"Inflation is expected to be around 9.5% by the end of 2023 and will tend to decrease gradually in 2024," the report added.

Central Bank Chairman Leonardo Villar said the bank would continue to adjust monetary policy in the medium term based on economic data to bring inflation back to the 3% ceiling.

Last year, inflation in Colombia far exceeded the central bank's target ceiling of 3%.

According to DANE (Colombia's Government National Administration of Statistics), the country's average inflation was recorded at 10.15% last year, reaching a 23-year high.

The group of commodities with the strongest price increase in 2022 is food. Of which, rice prices are recorded to increase by 54%, meat prices increase by more than 20%. In addition, restaurant and hotel costs also increased significantly.

In a press conference, DANE head Piedad Urdinola stressed that the high consumer prices in Colombia are partly due to the sharp depreciation of the local currency peso against the US dollar. In November 2022, the peso reached its lowest level in history against the US dollar.

In addition, the weakening of the world economy due to the impact of the conflict in Ukraine and the sharp increase in energy costs, along with problems related to the global supply chain and the sharp fluctuations in interest rates, are external factors that have caused inflation in Colombia to skyrocket.

Thien An

Colombia inflation rises inflation forecast