BOGOTA (Reuters) – Inflation in Colombia is expected to have moderated in March on a slight recovery in domestic consumption, which has been affected by high unemployment and a weak economy, analysts said in a Reuters poll on Wednesday.
Consumer prices are expected to have increased 0.42% in March, the 19 analysts surveyed said, compared with the 0.64% recorded in February and 0.57% in March 2020.
Estimates ranged from 0.25% to 0.54%.
Upward pressures will have been felt in food prices and education, but prices for recreation, alcoholic beverages and housing are expected to have increased less, those surveyed said.
“Our prediction is firstly supported by an increase in inflation on food. On that front it’s clear our models suggested risks of increases,” Bancolombia said in a note.
If the estimate is met, 12-month inflation for March would reach 1.42%, below the 1.56% registered in February.
Consumer price increase estimates for full-year 2021 were up slightly among those polled to 2.74%, compared with 2.69% predicted in the previous survey and still below the central bank’s 3% long-term target.
That increase will be explained by increases in food and commodity prices and the reversal of economic aid measures, Juan David Ballen, head economist at Casa de Bolsa, said.
“During the second quarter, annual inflation in Colombia and globally will increase in an accelerated way because of base effect,” he said. Base effect is a distortion in inflation figures because of very high or very low figures in the year-ago month.
Inflation will reach the long-term target at the end of 2022, those polled said.
The central bank has predicted inflation will reach 2.3% this year. Current inflation figures have allowed the bank’s board to hold its benchmark interest rate at a historic low of 1.75% in a bid to boost economic growth.
(Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Jonathan Oatis)