Unexpected drop in Colombia’s inflation rate could inspire consumer confidence
According to the Colombia’s National Statistics Department (DANE), inflation expectedly decreased by 0.05% in the month of June, reaching 3.4%. The rate represents a significant drop from the same time last year, when a 5.75% inflation rate was reported and comes despite aggressive cuts in the country’s interest rate by Colombia’s central bank, the Banco de la República.
The price of food, housing and entertainment sectors led the decline in the inflation rate. Food prices that saw the most significant drops were onions (-7.9%), bananas (-4.64%) and plantains (-3.02%).
Colombia’s Minister of Finance, Mauricio Cárdenas, said that the change indicates that inflation is under control. The country’s central bank previous set a target of between 2% and 4% for the inflation rate. It could also signal more rate cuts from the central bank in the coming months.
“Having inflation within the target range of the Banco de la República increases the financial power of consumers to buy homes and stimulates consumption. This will undoubtedly help with the recovery of the economy”, Cárdenas said.
Mauricio Cárdenas forecasted a 2% economic growth this year and of 3% next year, indicating that the economy was on track for improvement.
“We trust that we have adopted adequate steps, that the country is recovering,” he said.