By Nelson Bocanegra
BOGOTA, July 1 (Reuters) – Colombia’s inflation may have moderated in June versus the previous month, due to decelerating consumer price growth in some sectors, while annual inflation is expected to hit levels not seen since mid-2000, a Reuters poll revealed on Friday.
The median forecast from 14 analysts pegs inflation at 0.54% in June, lower than May’s 0.84% rate but well above last June when prices fell 0.05%.
Analysts’ estimates for consumer price growth in June ranged from 0.41% to 0.67%.
The biggest changes are expected to be in housing, due to pressure on rents and public services, while food could show mixed results.
Monthly inflation of 0.54% would take June’s 12-month inflation rate to 9.72%, higher than the 9.07% registered in May and once again further from the central bank’s 3% target.
“Although it’s a moderation in monthly terms, in annual terms we would be reaching a new peak in inflation because the base for comparison is very low,” said Carolina Monzon, chief economist for Itau in Colombia.
“The rebound effect is going to be significant,” she said.
Analysts now expect Colombia’s inflation to hit 8.95% in 2022, up from a previous May estimate of 8.13%.
Similarly, expectations for Colombia’s 2023 inflation now stand at 4.72%, up from 4.55% in the previous poll.
The new inflation estimates raise the possibility that Colombia’s central bank will increase its benchmark interest rate by another 150 basis points in its next meeting, repeating a move made on Thursday that had not been seen in 24 years.
Bank board chief Leonardo Villar conceded that expectations suggest inflation will fall to 3.8% in two years.
“Obviously we would like to find a way to make this faster, to avoid the risk that keeping inflation above the target for such a long period will generate the activation of indexation mechanisms that make it more difficult to return to the goal in the medium term,” Villar told reporters on Thursday.
(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; Editing by Paul Simao)
((Oliver.Griffin@thomsonreuters.com; +57 304-583-8931;))
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