Inflation rose in Latin America in the first quarter

America has been going through a spiral of inflation for months: Argentina reached triple digits with 104.3% year-on-year CPI growth, and while some countries appear to be close to peaking, the overall outlook for the first quarter of 2023 was characterized by fluctuation and wait.

The nine interest rate hikes implemented by the Federal Reserve, reaching between 4.75% and 5% – the highest rate in the last 16 years – somewhat reduced the pace of inflation in the United States, but not as much as desired.

In June 2022, inflation reached its maximum, 9.1 percent. and from July it fell to 5% in March. The latest decline, announced this week, was one percentage point.

Moreover, prices continue without falling and rose by one tenth in March. On May 2, the Federal Reserve will announce whether it will continue to raise rates or keep them.

For its part, in March Interannual Consumer Price Index (CPI) in Colombia it was 13.34%, the highest since 1999, while the accumulated figure for the first quarter was 4.56%, a number in which food played a large role.

He the costs of these basic inputs in the basket of Colombians increased by 28.1%so the government asked the businessmen for measures to reduce costs.

“Although inflation has continued to rise, each time these increases are smaller and when looking within different items, the slowdown is already beginning to be noticed“, said the chief economist of Scotiabank Colpatria, Sergio Olarte, who predicts that inflation will be close to 9% by the end of the year.

However, in other countries uncertainty continues, as in Argentinawhich accumulated retail inflation of 21.7% in the first three months of this year, 5.6 percentage points above the 16.1% recorded in the first quarter of 2022.

This scenario, exacerbated by 7.7% monthly inflation recorded in March (104.3% at the annual level), the main consequence is the decline in the purchasing power of citizens.

Spillover inflation, one of the country’s chronic problems (peaking at 3,079% between 1989 and 1990), in February, the year-on-year index reached a three-digit figure and is heading towards 110%, according to expectations revealed by the central bank.

“It would be especially important to have a solid monetary policy, as well as a fiscal policy that is in line with what is in the program supported by the Fund,” said s.Deputy Director of the IMF Research Department, Petya Koevathis week as part of the spring meetings in Washington.