Colombia’s consumer prices rose 0.28 percent in May, the government’s DANE statistics agency said on Saturday, above market expectations due to surge in food prices.
Higher-than-expected consumer prices could fuel rising inflation expectations that pushed the central bank to raise its key interest rate by 100 basis points to 4 percent since February. It could also push up yields on peso-denominated TES bonds rise.
A Reuters poll of 37 analysts earlier this week showed inflation rising in May at a rate of 0.20 percent compared with 0.10 percent in May 2010.
Monthly inflation was 0.12 percent in April.
Food prices rose 0.78 percent in May due to heavy rains and flooding in Colombia, DANE said.
Inflation in the 12 months to May was 3.02 percent, up from 2.84 percent in April, DANE said. The central bank has an inflation target of 2 percent to 4 percent this year.
So far this year, consumer prices have risen 2.20 percent compared 2.35 percent for the Jan-May period in 2010.
Regionally, high global food and oil prices have stoked inflation worries, and central banks in Colombia, Brazil, Chile and Peru have all increased interest rates in an attempt to rein in consumer prices.
Analysts believe Colombian food prices will decline in the second half of the year due to better climatic conditions and the central bank’s four rate hikes. Most experts say enough crops are warehoused to keep prices stable.
Estimates for the rise in consumer prices for 2012 have edged up due to the transmission effect from better economic growth for this year and next. The government sees economic expansion of more than 5 percent in 2011.