Colombia Sees Lower Than Expected Inflation

Source: Reuters

Government posts 0.14 pct inflation in November

* Consumer prices up 3.96 pct in 12 months to November

* Prices increase 3.29 pct in Jan – Nov period

Colombia’s consumer prices rose 0.14 percent in November, the government said on Monday, well below the 0.20 percent increase forecast in a Reuters poll.

The Andean country reported inflation at 0.19 percent in October, the same as in November last year.

Inflation in the 12 months to November was 3.96 percent, the government’s DANE statistics agency said, slightly below the central bank’s annual inflation target for 2011.

The monetary authority has set an inflation target of 2 percent to 4 percent for this year.

The rise in consumer prices last month was driven mainly by the communications, transport and health sectors, the DANE said.

Colombia’s central bank raised its benchmark interest rate by 25 basis points to 4.75 percent last month in an attempt to put a lid on prices.

Consumer prices in the January to November period rose 3.29 percent, up from 2.51 percent in the same period last year.

Like other emerging markets, Colombia faces a dilemma over whether to hike rates to fight inflation, which puts upward pressure on currencies by making assets more attractive, or combat appreciation at the risk of inflation.

Colombia’s decision last month to raise rates bucked the trend among central banks in Latin America to hold or cut rates on concerns that Europe’s debt crisis will slow global growth and harm domestic economies.

Experts see 2011 inflation at 3.65 percent, according to the average forecast of analysts in the latest Reuters poll.

 

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