Latin America’s inflation in August

Inflation continues to make headlines globally and regionally, and August was no exception.

Although some corners of Latin America began to see an incipient slowdown in prices (Brazil), the trend remains at historically high levels in the vast majority.

Countries with long-standing inflationary regimes, such as Argentina and Venezuela, continued along this path.

On the other side of the spectrum is Bolivia, with a rate of less than 2% year-on-year.

In this context, Bloomberg Linea surveyed how inflation was in Latin American countries throughout August and how it adds to the annual figures.

ARGENTINA, VENEZUELA, AND CUBA WITH THE HIGHEST FIGURES

Although Venezuela managed to leave behind the hyperinflation that hit it between 2017 and 2021, the country continues to live with year-on-year figures above three digits.

Although the government figures are not the same as the private ones, both indexes registered marked rises during the last month.

The government report indicated that August inflation stood at 8.2% month-on-month, which means 114.1% year-on-year.

These numbers allow for a mixed reading: the month-on-month measurement stopped decelerating, but the year-on-year number continues to fall. In the accumulated 2022, that is, from January to August, the price increase in Venezuela, according to official data, reached 60.5%.

However, as not all analysts trust the government’s figures, it is also worth mentioning those of the Venezuelan Finance Observatory (OVF), the ones most closely followed by the local market.

According to this entity, the monthly inflation for August was 17.3%, and the inter-annual inflation reached 153%. Furthermore, OVF puts the accumulated inflation in 2022 at 90%.

Meanwhile, the inflation figures in Argentina fell like a bucket of ice water on the government, expecting much more moderate numbers than those seen in the last month.

The Argentinean National Institute of Statistics and Census Consumer Price Index showed that monthly inflation in August was 7%, and year-on-year inflation reached 78.5%.

So far, in 2022, Argentina has accumulated an inflation rate of 56.4%, when the 2022 Budget Bill, which Congress rejected, projected that the generalized price increase for the whole year would be around 33%.

The latest Relevamiento de Expectativas de Mercado (Market Expectations Survey) of the Central Bank of Argentina showed that the median of the country’s consulting firms estimates that inflation in 2022 will be around 95%.

The other Latin American country undergoing an inflationary overflow is Cuba. Although in this case, it is impossible to know the exact number since the government does not provide transparent numbers.

Economist Steve Hanke from Johns Hopkins University usually publishes an inflation ranking of his own, for which he considers the annual inflation implicit in the purchasing power parity that arises from the free exchange rate of the countries.

According to this indicator, Cuba is the third country with the highest inflation in the world, with 162% year-on-year, behind Zimbabwe and Lebanon.

SIX OTHER LATIN AMERICAN COUNTRIES WITH INFLATION OVER 10%

In August, Chile’s inflation reached 14.1% year-on-year, the highest figure for the Andean country in 30 years.

The index marked a month-on-month increase of 1.2% and has accumulated 9.9% this year.

Nicaragua (12.15%), Costa Rica (12.13%), Colombia (10.84%), Paraguay (10.5%), and Honduras (10.4%) also showed inflation above 10% year-on-year.

In the case of Colombia, the number observed is the highest since 1999 to date.

Honduras is one of the few countries that showed monthly disinflation (-0.03%) in August.

WHAT’S HAPPENING IN THE REGION’S TWO LARGEST ECONOMIES

In the region’s leading economy, Brazil, the trend reversed in the last two months: in July and August, the country showed negative month-on-month inflation.

In August, the South American giant faced a price increase of 8.73% year-on-year and a drop of 0.36% compared to July. In the year-to-date, inflation in Brazil is 4.39%.

Meanwhile, in the region’s second-largest economy, Mexico, August closed with a year-on-year inflation rate of 8.7%, the highest value in 22 years.

Meanwhile, monthly inflation was 0.7%, and the cumulative figure for January-August reached 5.54%.

The trend continued in the first fortnight of September: the National Consumer Price Index showed a variation of 0.41 compared to the previous fortnight, bringing the annual figure to 8.76%.

THE REST OF THE COUNTRIES

The country with the lowest inflation in the region is Bolivia, whose interannual index stood at 1.55% in August.

It is followed by Panama, with 2.07%. Panama also had negative inflation (-1.4%) in August compared to July.

The podium of those with the lowest inflation is completed by Ecuador, a dollarized country with 3.77% interannual.

What is the year-on-year inflation in the rest of the countries, with figures as of August? Uruguay, 9.53%; Guatemala, 8.87%; Peru, 8.4%; and El Salvador, 7.66%.

With information from Bloomberg