Colombia’s inflation has not reached its peak yet
According to available data, after a significant decline in GDP in Q2, recovery activity hit a snag during Q3, when repeated extensions of the national quarantine up until August battered the domestic inflation economy.
After three consecutive months, industrial output declined. The August drop in industrial output was due to lower vehicle and travel component production.
Due to strong domestic demand, price indexing, and the depreciation of the peso, Colombia’s rising inflation rate has not yet reached its peak. According to recent data, this will likely lead to a more restrictive monetary strategy than originally anticipated by Leonardo Villar, chair of the central bank board.
Inflation should continue to rise, but the central bank predicts it will start to drop in the next months and reach the bank’s long-term inflation target of 3% by the end of 2024, according to Villar.
More about Colombia’s inflation
Despite efforts by the central bank to chill the economy by raising the benchmark interest rate to a level of 12.75%, up from 1.75% in September 2021 when it began its upward monetary cycle, Colombia’s 12-month inflation topped 13.25% at the end of January,…