Colombia Central Bank’s Inflation Fight Hit by August Food Spike
Heavy rainfall in Colombian farming regions caused wholesale food prices to spike this month, undermining the central bank’s efforts to curb the fastest inflation in more than two decades.
Prices of some vegetables jumped 7.4% from a month earlier, while fresh fruit prices rose 4%, according to the government’s Unit for Rural Agricultural Planning, or UPRA.
Prices of rice, dry beans, some cheeses, pork also jumped, while beef and chicken prices fell, the UPRA said in a statement,
Price rises accelerated from July, ending a trend of slowing increases that started in January.
Central bank chief Leonardo Villar has expressed concern that faster price rises this year could get baked into wages and other contracts next year, complicating the task of getting inflation expectations back to the 3% target. The bank has raised its policy rate to 9% from 1.75% over the last year in a bid to damp inflationary pressure.
Annual inflation accelerated to 10.2% last month, while food prices rose 24.6%. Colombia targets inflation of 3%, plus or minus one percentage point.