Colombian inflation to accelerate in April despite pandemic

BOGOTA: Colombia's consumer price increases will go up in April on food and public utility price pressures and despite ongoing effects from the coronavirus pandemic, analysts said in a Reuters poll on Thursday.

According to median predictions from 17 analysts, inflation will be 0.33% in April, compared to a 0.16% price increase during the same month last year and the 0.51% registered in March 2021.

That variation would take 12-month consumer price growth to 1.69%, above the 1.51% registered in March of this year.

"In terms of the factors that could influence the behavior of prices, we have something from public utilities in the housing sector because of the revision of prices for energy and even water," said Camilo Perez, head economist at Banco de Bogota.

"We have less impact on restaurants and hotels, which have registered slightly above-normal increases despite some closures," he said.

Inflation expectations for the year were up slightly in the poll to 2.82%, from the 2.74% projected in last month's survey.

Expectations for the close of 2022 were up to 3.07%, just above previous predictions that it would reach the central bank's long-term target of 3%.

"The Colombian economy is starting to gain traction," said Wilson Tovar, head of economic studies at the Acciones y Valores brokerage. "That makes us suppose we will slowly leave behind low levels of inflation."

Those polled predicted the potential approval of a controversial tax reform by Congress, which includes an expansion of the items subject to value added tax, could put pressure on prices.

But the intensity of the reform's possible effect remains to be seen, as the government has expressed its willingness to lower the law's targeted fundraising amount to around $4.8 billion in order to gain congressional approval, down from an original target of more then $6.3 billion.