Colombia Inflation Surprises Analysts Again With Sharp Dropby
September result lower than all forecasts in Bloomberg survey
Effects of drought and peso drop are rapidly wearing off
Colombia’s annual inflation rate continued its sharp drop toward the central bank’s target as food supplies improve following a drought, and a stronger peso cools the rise in import costs.
Consumer prices rose 7.27 percent in September from a year earlier, the national statistics agency said Wednesday, lower than all forecasts in a Bloomberg survey for a second straight month. The median estimate of 28 analysts surveyed by Bloomberg was for annual inflation of 7.45 percent.
The central bank will start reducing borrowing costs in January, according to its most recent monthly survey of analysts, amid signs the economy is cooling more than it had forecast. July’s inflation rate of 8.97 percent was the fastest in 16 years, but policy makers repeatedly insisted that it was mainly being driven by the drought and the peso drop, which it said were one-time effects.
Finance Minister Mauricio Cardenas and other members of the central bank’s board have said they want to see clear signs that the nation’s inflation outlook has improved before they’ll consider looser monetary policy.
Annual food price inflation slowed to 10.6 percent in September, from 13.1 percent in August. The central bank left its policy rate unchanged at 7.75 percent in September, after raising it 3.25 percentage points in the 11 months through July. The economy grew 2 percent in the second quarter from a year earlier, weaker than the central bank’s forecast of 2.6 percent.
Colombia targets inflation of 3 percent, plus or minus one percentage point. Policy makers have repeatedly pledged to get inflation back within its target range by the end of 2017.