Venezuela and Argentina at the top: this is how inflation closed 2022 in Latin America

Quite possibly, 2022 will be remembered throughout the world as a year in which dozens of countries in which people had forgotten the meaning of the word inflation once again experienced moments of anguish due to the general rise in prices.

In the case of Latin America, a heterogeneous panorama is observed, which includes countries such as Venezuela and Argentina, which occupy places on the world inflation podium, and others such as Panama or Bolivia, which are among the least inflationary in the world.

Among these poles we see some intermediate cases of countries that in 2022 suffered price increases that they had not observed for several decades, but that ended the year with a slowdown. However, everyone is aware that the problem will be present in 2023.

Looking at what happened in some of the main economies of the region, we can see that:

In Brazil, the Consumer Price Index (CPI) had reached 12.13% year-on-year in April (the highest value in 27 years) and from there it began to decline. 2022 ended with an annual inflation of 5.89% in the main economy of the region.

Mexico, meanwhile, reached a CPI of 8.7% in August, the highest figure in 22 years. In recent months it began to decompress and closed the year at 7.82%.

In Chile the situation showed ups and downs. In August, inflation reached 14.1% year-on-year, the highest level in 30 years. Then it began to decompress and stood at 12.8% in October, although in November the CPI surprised everyone and rebounded to 13.3%.

Finally, it closed 2022 at 12.8%. The Central Bank of Chile admits that 2023 will be a recessive year, since it will seek to accommodate the imbalances, to lower inflation.

In Colombia, the upward trend has not yet ended and inflation reached 13.12% interannual in December, the highest value in 23 years.

THESE ARE THE COUNTRIES THAT SUFFERED THE MOST INFLATION IN 2022

Although there were several in the region that suffered from the ravages of prices, in these years marked by the mega-issuance of money and the high costs of raw materials due to the Russian invasion of Ukraine, the truth is that most of the countries Latin Americans went through the situation without experiencing the anxiety of the 80s or 90s, when it was common for some of those mentioned to have three or four digits inflation.

However, there are three countries that escape this rule and that do live with price increases that are unlikely for any other place. One of them is Venezuela, which, although it left behind the hyperinflation of four years in 2021, continues to be among the countries with the most runaway price increases in the world.

According to the Venezuelan Finance Observatory (a private entity that carries out measurements independent of the Central Bank), prices increased 37.2% monthly in November and the year-on-year increase reached 305.7%.

It should be noted that in 2021 Venezuela had ended the year with inflation of 686.4%.

Another country that has been suffering the ravages of inflation is Argentina, which closed 2022 with inflation of 94.8%, the highest number since 1991.

And, despite the fact that the number is outlandish, the Argentine government is breathing with something of calm since it began to slow down in recent months.

However, analysts consulted by Bloomberg Línea considered that the inflationary slowdown in Argentina is temporary and that the country could end 2023 close to 100% again.

Cuba also has a high inflation regime, although there it is more difficult to obtain reliable indices. One way of approximating what is happening is the so-called “Hanke index”, which shows that prices in Cuba would have risen 140% in 2022.

Economist Steve Hanke of Johns Hopkins University often publishes his own inflation ranking, for which he considers the annual inflation implicit in purchasing power parity arising from the free exchange rate and the black market.

This index cannot be compared with the CPI of the countries, but, at least, it allows us to approach the problem.

THE COUNTRIES WITH THE LOWEST INFLATION IN THE REGION

There are three Latin American countries whose inflation rates are among the lowest in the world:

• Panama, with an annual inflation of 2.07% in 2022;
• Bolivia, with an inflation rate of 3.12% in 2022, and
• Ecuador, where prices rose 3.74% in the last twelve months.

INFLATION IN THE REST OF LATIN AMERICA

This was the annual inflation of the rest of the Latin American countries in 2022:

• Nicaragua: 11.59%
• Honduras: 9.8%
• Guatemala: 9.24%
• Peru: 8.46%
• Paraguay: 8.1%
• Costa Rica: 7.88%
• El Salvador: 7.34%

With information from Bloomberg