2017.11.2220:07:00UTC+00LATAM: Bradesco Points To General Slowdown In Inflation During 2017

Brazilian bank Bradesco said that throughout 2017 there was a general reduction in inflation in Latin America - except in Mexico, where inflation accelerated. By 2018, Bradesco's analysts expect inflation in the region to continue at healthy levels, leading central banks to keep interest rates at the current patterns.

In Colombia, according to Bradesco, the slowdown in food prices was the main factor for the decline in inflation. Such prices reached a year-on-year increase of 15.7% in mid-2016 and fell to 2.5% in October, which contributed to a 3.8 percentage point decrease in general inflation. Thus, annual consumer prices receded to 4.0% in 2017, after recording a peak of 9.0%.

In Peru, the rise in food prices caused by heavy rains in the first months of the year was quickly reversed, Bradesco noted. The prices returned to the previous level in the following months.

In Argentina, the dynamics of inflation have been different from those of other countries. After a rise of 41.0% in 2016, driven by the withdrawal of subsidies for electricity tariffs, inflation declined this year, reflecting mainly the lower impact of these measures. However, the speed of this fall has frustrated expectations, since from January to October inflation already accumulates high of 19.4%, exceeding the ceiling of the central bank target, of 17.0% for 2017.

For 2018, however, Bradesco indicates that it would be necessary to monitor oil prices and the possibility of the climate phenomenon La Ni?a hits with greater intensity.