Colombia’s consumer price index accelerated in June, fueled by higher food costs generated by torrential rains that damaged farmland.
The consumer price index, released Tuesday by the government’s statistics agency, posted a 0.32% increase. The figure is higher than the market consensus, which projected a 0.22% rise, and it’s the highest inflation reading since February this year.
The inflation data suggest that continuing downpours in the last few months have damaged farmland and pushed up food prices, something which the central bank has said will have only a temporary impact on the broader consumer price index. Food prices posted a 0.43% increase in June.
Entertainment costs, meanwhile, climbed 2.87%, while housing expenses rose 0.39%. Inflation for the last 12 months stands at 3.23%.
Concerns that inflation could accelerate emerged in the last months of 2010 and the beginning of this year as a spate of deadly rains destroyed crops and roads. Inflation, however, has remained within the central bank’s target range of 2% to 4% for the year.
The central bank, seeking to cool off domestic demand and credit, started to hike its benchmark rate earlier this year. Colombia’s benchmark rate now stands at 4.25%, and the economy is expected to grow as much as 6% this year.
The minutes from the last central bank meeting show that the bank’s seven-member board is divided over whether to continue the rate increases.
One member voted against the measure, arguing that price increases are well within the central bank’s target range of 2% to 4%.
Another board member, who voted in favor of the rate hike, warned that the June 17 increase “should be the last.”
The central bank has warned that inflation could likely accelerate in the first half of 2011 but would slow down for the end of year and remain within the target range of 2% to 4%.