Informe sobre Inflación - Septiembre de 2015

Abstract

Annual consumer inflation increased reaching 5.35% by September. The average of the four core inflation indicators also increased, reaching 4.89%. Much of the acceleration in inflation so far this year (Graph A) is explained by the passthrough of nominal depreciation to consumer prices, by higher costs for imported raw materials and by a lower dynamism in the food supply. The forecasts of the technical staff at Banco de la República suggest inflation will surpass the current figure by the end of 2015. It is expected to remain there during the first half of 2016 and then begin to converge toward the 3.0% target. Convergence towards the target for inflation is slowed by the pass-through of part of the peso depreciation to consumer prices and by the severe El Niño weather phenomenon, given the direct impact both these phenomena have on prices and inflation expectations, as well as the possible activation of indexing mechanisms.