According to the projections of the Central Reserve Bank (BCR), inflation for the end of the year would be at 3.3% and only in 2024 could it reach the target range. In this sense, a decrease in the prices of some foods is anticipated, especially those that were affected by the lack of fertilizers and droughts.
This scenario could contribute to improving the consumer sector, which has been significantly impacted by the increase in the costs of certain inputs. During the first quarter of 2023, private consumption only experienced a growth of 0.7%, while public consumption decreased by -5.9%.
It should be noted that this rise in food prices mainly affected citizens with lower incomes, forcing them to reduce their purchases to the essentials.
“There was a strong impact on consumer confidence. This is reflected in the fact that he has become very cautious in increasing spending, family budget costs are more oriented to comply with obtaining the basic food basket. To the extent that food prices are also corrected, that will also help consumption to recover”, said Adrián Armas, manager of Economic Studies of the Central Reserve Bank (BCR) during the XI Congress of Business Families and Wealth Management, organized by El Dorado Investment.
Along these lines, the BCRP representative stated that, based on the monthly evaluation and the available data, it will be decided whether to maintain the reference rate at 7.75% for the eighth consecutive month or whether a cycle of reductions will eventually begin.
Source: Larepublica
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