This is how inflation will end in 2023 in LatAm countries, according to the market

By Juan Pablo Álvarez

Many countries that had forgotten the meaning of inflation have been hit again by price increases of around 10% a year over the past 18 months.

Still, most Latin America seems to be moving away from double-digit or double-digit inflation.

At least, that is what the market surveys conducted by the region’s central banks indicate.

To achieve this deceleration, central banks had to take their interest rates to 13.75% in Brazil or 11.25% in the cases of Mexico and Chile.

In Colombia, the monetary authority took its rate to 13.25%, and even so, the year-on-year Consumer Price Index (CPI) remained at high levels (12.82% year-on-year) in April.

Despite this, market analysts are confident Colombia will close 2023 below 10% inflation.

Inflation continues to be a nightmare in Argentina, where prices rose 108.8% between April 2022 and April 2023, and consulting firms and banks expect that by the end of this year, the CPI will be close to 130% year-on-year.

WHAT WOULD BE THE INFLATION OF LATIN AMERICAN COUNTRIES BY THE END OF 2023?

Many of the region’s central banks conduct surveys among consulting firms, banks, and other players in the financial sector to know agents’ expectations.

Bloomberg Línea surveyed the inflationary expectations of analysts in the countries where these surveys are carried out:

Argentina

The country closed April with 108.8% year-on-year inflation, the third highest in the world behind Venezuela (471%) and Lebanon (264%).

According to the latest Market Expectations Survey of the Central Bank of Argentina, analysts expect the country’s inflation to end 2023 at 126.4%.

However, everything seems to indicate that the next survey, to be published in June, will come with even more lapidary expectations.

Bolivia

Bolivia is one of the countries with the lowest inflation in the world (2.7% year-on-year in April).

However, according to the median of analysts surveyed by the Central Bank, it will end 2023 with 3.5% inflation.

Brazil

Brazil closed April with year-on-year inflation of 4.18%, but the market expects a rebound: those surveyed by the Central Bank of Brazil expect to end 2023 with a CPI of 6.03% year-on-year.

Chile

The latest Market Expectations Survey in Chile showed analysts’ median belief that inflation would close in 2023 at 5%.

The Central Bank must work hard to achieve this, as April closed at 9.99%.

Colombia

Colombia is one of the few countries that has been unable to break 10% year-on-year inflation (12.82% in April), but it may achieve it by the end of the year: inflation expectations for December stood at 9.12%.

For this country in particular, the survey of Fedesarrollo and the Colombian Stock Exchange was considered.

Guatemala

In the case of Guatemala, analysts consulted by the Central Bank expect inflation to stand at 5.8% at the end of the year.

In April, it closed at 8.32% interannual.

Honduras

Honduras would close 2023 with an inflation rate of 8.1%, according to analysts asked by the Central Bank for its Survey of Macroeconomic Analysts’ Expectations (7.44% closed in April).

Mexico

Mexico, the second largest economy in the region, would close in 2023 with a price increase of 5.05% year-on-year, according to Banxico’s Survey of Expectations of Private Sector Economic Specialists.

In April, Mexico’s year-on-year inflation was 6.25%.

Paraguay 

In Paraguay, 2023 may end with an annual inflation rate of 5% if analysts consulted by the Central Bank are correct in their forecasts.

The CPI for April in the Paraguayan territory showed an annual 5.3%.

Peru

In the Central Reserve Bank of Peru survey, there are three levels: economic analysts expect 2023 to close with 4.95% inflation; the financial system believes it will be 4.8%; non-financial companies project 6%.

In April, Peruvian inflation was 7.96% year-over-year.

Dominican Republic

Economic analysts surveyed by the Central Bank expect inflation to be 4.9% in December 2023.

In April, it was 5.2% year-over-year.

Uruguay

The Uruguayan Central Bank survey shows analysts’ median sees 7.5% yoy inflation for December. In April, it was 7.61%.

ECUADOR AND PANAMA, WITH VERY LOW INFLATION RATES

Not only Bolivia has an enviable consumer price index, something similar occurs in countries such as Ecuador, where year-on-year inflation in April was 2.44%, and Panama, which closed the fourth month of the year with year-on-year inflation of 0.95%.

With information from Bloomberg

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