Colombia Inflation Jumps Most Since 1998 as Unrest Hits Supplies

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Colombian inflation jumped the most in more than two decades as civil unrest snarled supply chains already strained by coronavirus lockdown restrictions.

The annual inflation rate accelerated to 3.30% in May from 1.95% the previous month, its biggest increase since 1998. Consumer prices rose 1% from the previous month, above the 0.79% median estimate from analysts in a Bloomberg News survey, the national statistics institute said on Saturday.

Analysts surveyed by the central bank now see year-end inflation at 3.24%, above the mid-point of the 2% to 4% target range, as supply bottlenecks in an economy still emerging from the pandemic-driven recession take time to clear.

“Those expectations have been brought forward, among other things, with commodity and food price rises and the reopening of the economy causing more inflation,” Juan David Ballen, an analyst at Casa de Bolsa, said by phone.

A government fiscal reform package sent to congress in late April that included proposed tax hikes ignited nationwide demonstrations and deadly clashes with security forces. Protesters also blocked major national highways and the main Pacific coast port, causing food and supply disruptions across the country.

Read more: Colombia’s Bond Risk Tops Brazil as Protests, Politics Take Toll

As is the case worldwide, economic data in Colombia is being distorted by comparisons to the pandemic-depressed data seen in the secondquarter of 2020.

Economists and traders are now betting that policy-makers will raise the 1.75% record-low interest rate in the fourth quarter.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.