Monetary policies hold inflation in America in 2019



Inflation continued at “relatively low” levels in 2019 in America, ranging from 1.9 in Peru to 3.8 in Colombia, in a year in which despite the vicissitudes of devaluation and loss of power Purchasing monetary policies were key, analysts told Efe.

Despite notable exceptions such as Venezuela or Argentina, stability “has to do with the greater seriousness of monetary policy, especially linked to the independence of central banks,” analyst Francisco Azuero Zúñiga explained to Efe in Colombia.

The expert from the Universidad de los Andes said that “the impact of these low inflation results in greater investor confidence, since this indicator is a sign of the seriousness of macroeconomic management.”

“Despite the profound Latin American economic slowdown, inflation levels have remained stable,” which “seems like good news in a context as turbulent as the one that crosses the region,” the dean of the Faculty of Administration told Efe , Finance and Economic Sciences of the Ean University, Lorena Piñeiro.

SOUTH AMERICA

Venezuela registered an inflation of 7,374.4% in 2019, much lower compared to 2018 when the rate was 1.7 million%, according to Parliament.

Economist and deputy Ángel Alvarado, a member of the Legislative Finance Commission, believes that high price increases have created an “exclusion between those who have bolivars and those who have access to a remittance (from their relatives abroad) “.

Another critical case is that of Argentina, where the CPI accumulated an increase of 53.8% last year, the highest mark since 1991, mainly due to the strong appreciation of the dollar in the local market.

Inflation reached 4.31% in Brazil in 2019, a year in which the South American giant was close to declaring itself in recession under the government of the far-right Jair Bolsonaro, which by 2020 provides for a 2.4% growth in the economy.

In Uruguay, the CPI stood at 8.79% in 2019, coinciding with a period of high devaluation of the local currency and the victory of right-wing Luis Lacalle Pou in the presidential elections.

Inflation in Colombia, where the last half of 2019 was marked by protests against the Government’s economic and social policies, was 3.80% last year.

Chile, the epicenter of strong social demonstrations that put the right-wing government of Sebastián Piñera in check, marked a CPI of 3%.

In Paraguay, whose government acknowledged having entered a recession last year, inflation in 2019 was 2.8%, while in Peru it reached 1.9%, a percentage within the target range of between 1 and 3%.

Bolivia concluded 2019 with an inflation of 1.47% despite the rise in prices in October and November, months in which social conflicts affected the country and led to the resignation of Evo Morales.

On the other side, in Ecuador the annual index reached 0.07% in a scenario of fragile economic situation in the country that caused the Government to have to go to more than 10,200 million dollars in loans.

NORTH AMERICA

In U.S.A. Inflation ended at 2.3%, being the highest interannual record since October 2018 and confirming the upward trend in prices compared to 1.9% with which it closed 2018.

The National Consumer Price Index (INPC) of Mexico stood at 2.83%, the second lowest rate since 2015, and in Canada inflation stood at 2.3% in the accumulated until November pressured by rates of gasoline

CENTRAL AMERICA AND THE CARIBBEAN

Honduras ended 2019 with a rate of 4.08%, while Guatemala reached 3.41% and in El Salvador, even without knowing the figure for the year, the accumulated was at 0.11 until November.

The CPI of the Dominican Republic ended at 3.66% and Costa Rica registered 1.52%, lower than that reported in 2018 when it was 2.03%.

In Nicaragua, a country affected by the impact of the socioeconomic crisis that has caused an estimated GDP drop of 5% in 2019, the accumulated inflation until August was 4.03% and the year-on-year until that same month of 6.30 %.

Panama, which leads the economic growth of Central America with an estimated rate of 3.5% in 2019, according to the World Bank, accumulates an inflation of 0.4 between January and November 2019, the last period reported.

2020 FORECASTS

The analyst Azuero said that by 2020 “economic conditions are not expected to change too much, including inflation rates in Latin America.”

“Unless there are extraordinary phenomena, for example, a fall in the prices of raw materials, which push up exchange rates, it is not expected that the countries of the region will experience inflationary pressures,” he added.

“Keeping inflation under control appears as a determinant to sustain the secrecy against the international turbulence of the economy (…) the strong fiscal adjustments due to high public spending during the boom period now lead to social tensions and pressures to reduce inequality and poverty, which will contract domestic demand, “added Piñeiro.

The following is the comparison of inflation in America:

COUNTRY 2018 2019

Argentina 47.6% 53.8%

Bolivia 1.51% 1.47%

Brazil 3.75% 4.31%

Colombia 3.18% 3.80%

Costa Rica 2.03% 1.52%

Cuba Not available Not available

Chile 2.6% 3.00%

Ecuador 0.27% 0.07%

United States 1.9% 2.3%

Canada 2.2% 2.3% (partial)

El Salvador 0.43% 0.11% (partial)

Guatemala 2.31% 3.41%

Honduras 4.22% 4.08%

Mexico 4.83% 2.83%

Nicaragua 3.89% 4.03% (partial)

Panama 0.8% 0.4% (partial)

Paraguay 3.2% 2.8%

Peru 2.19% 1.9%

Dominican R. 1.17% 3.66%

Uruguay 7.96% 8.79%

Venezuela 1,700,000% 7,374.4%

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