Colombia’s consumer prices will probably rise less than the projected target in 2013 because of weak internal demand, according to the country’s central bank.
National statistics agency DANE reported that so far in 2013 there has been an increase of 1.21% in the cost of household goods, 0.41 percentage points lower than in the same period in 2012.
Weakening in household consumption in the first quarter of 2013 is due to a drop in consumer confidence according to the bank. Consumer confidence in Colombia decreased to 14.8 in March 2013 from 14.9 in February. Historically from 2003 until 2013 Colombia’s consumer confidence averaged 19.98 reaching an all-time high of 38.8 in August 2010, said Trading Economics.
In March 2013 economists predicted a 3.04% rise in consumer prices, however predictions fell to 3.02% in April, said Bloomberg.
The central bank said that considering these factors the annual growth rate of GDP for 2013 and 2014 was fixed in a range between 3% and 5%. “The uncertainty about the behavior of investment in Colombia and about the size of the recession in the Euro area along with fiscal adjustment in the U.S. Largely explain the extent of the prediction intervals.” Gross domestic product rose 4% in 2012, down from 6.6% in 2011.
Colombia’s Central Bank said that inflation will probably finish below the target of 3% in 2014 because of trends in consumer prices and weak inflationary pressures arising from demand and wage costs,
The annual inflation rate rose to 2.02% in April 2013, from a 55-year low of 1.83% in February.
Weak global demand has reduced international trade and industrial production in Colombia, and while international oil prices remain relatively high, the levels are lower than those for 2012. Coal and coffee prices have also fallen since last year. These factors will mean the average terms of trade for Colombia in 2013 are likely to be lower than in 2012. “Business partners of Colombia will probably grow a little less this year than last,” said the central bank.
In the fourth quarter of 2012 the economy grew 3.1% year-on-year said the central bank while the growth of household consumption was 4% and in line with expectations. GDP growth in 2012 was 4%.