After two consecutive years of annual inflation figures below 1%, in 2017 prices will increase more strongly, especially in the first six months of the year.
This is one of the central bank’s projections in its inflation report, published last December.
According to the calculations, at the end of the first semester cumulative inflation will be around 1.7%, more than double for the same period in 2016.
To reach this figure the Bank makes a series of assumptions including a normalization of monetary policy by the Federal Reserve of the United States and faster growth of the economy of the country’s main trading partner.
Later in the year, between July and December 2017, the price variation -calculated with the consumer price index- would be 0.9%.
The behavior of inflation during this new year is associated with two elements: the expectations of individuals and companies about the growth of prices and the pressure of spending in the economy.
In the end, in December 2017 the accumulated variation would be 2.6%.
According to the Central Bank, projected inflation reflects further monetary policy committed to the goal of reaching an inflation similar to the one from the major trading partners, which is estimated at 3% annually.
The entity believes that the country’s inflation will finally return to the target range announced in the Macroeconomic Program in the third quarter of 2017. According to this document, price growth will be in the range of 2% to 4%.
For the economist Luis Diego Herrera, from Acobo firm, it is very possible that inflation will be in the projected figure.
The Bank, however, warns that the variations could be higher if the government’s finances deteriorate further, which would restrict the actions of monetary policy and generate price pressures.
Other reasons would be further depreciation of the domestic currency and adverse weather conditions affecting production costs and performance of agricultural activity.