Inflation in the main economies of Latin America is the highest in 15 years, after having suffered two impacts: the pandemic and the war in Ukraine after the Russian invasion, experts from the International Monetary Fund (IMF) said this Friday.
Inflation accelerated in Brazil, Chile, Colombia, Mexico and Peru in 2021 initially due to higher food and energy prices, monetary policy and wage adjustments, as well as the recovery in demand after the pandemic.
But it got worse with the war in Ukraine, say Maximiliano Appendino, Ilan Goldfajn and Samuel Pienknagura, of the IMF’s Department for the Americas.
In an IMF blog post, the authors estimate that a “combined 10 percentage point shock to oil and food prices would lift inflation by 1.1 percentage points” in those five economies.
Inflation hits low-income households the hardest, which is worrying in a region with historically high levels of inequality.
Global factors, in particular the prices of raw materials and imports, were the main drivers of inflation in 2021, and the data suggests that these “play a more important role in the region than in advanced economies,” he says. Article.
Internal factors also contributed, such as those linked to the pandemic. As in some advanced economies, Brazil, Chile, Colombia, Mexico and Peru were heavily influenced by increased demand for goods and services as mobility restrictions were lifted to contain Covid.
In the long term, experts recommend adapting monetary policy, adjusting rates, so they call on central banks to “be vigilant and continue taking decisive action if necessary.”
Brazil, the main economy in the region, raised its reference rate in March by one percentage point to 11.75%, a maximum in almost five years. (I)
Source: Eluniverso
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