Latin America was the region most affected by inflation last year. The International Monetary Fund (IMF) announced that the inflation rate for 2021 is estimated to be 9.3 percent in Latin America, the region with the highest price increase. Experts state that the most common tool used by the countries of the region in the fight against inflation is interest rate hikes.
The main causes of high inflation in Latin America, which was facing structural economic difficulties even before the pandemic, are the damage caused by the pandemic process in the regional economy and the problems encountered in the supply chain.
Despite the fact that Latin America is the region with the highest increase in prices, inflation is in single digits in countries other than Venezuela, Argentina and Brazil, which have double-digit inflation or higher.
Last year, the country with the highest inflation rate in Latin America was Venezuela, which was in an economic crisis with 686.4 percent, followed by Argentina with 51.2 percent and Brazil with 10.06 percent, according to November figures.
The countries with the lowest inflation were Bolivia with 0.90 percent and Ecuador with 1.94 percent.
Highest inflation in recent years in major economies
According to the Central Bank (BC) data, Brazil, which grew by 34 percent in 2021 due to the increase in raw material prices, reached 280.39 billion dollars in exports and had a foreign trade surplus of 61.01 billion dollars. Although this figure is the highest recorded in Brazil, which has the largest economy in the region, since 1989, the inflation rate in the country reached 10.06 percent, the highest rate in the last six years.
Authorities point to the increase in fuel prices and the energy crisis due to the decrease in precipitation among the main reasons for the increase in inflation.
In Mexico, the second largest economy in the region, annual inflation was announced as 7.36 percent, according to the country’s official statistics agency (İnegi). This rate is more than double the annual inflation target of the Central Bank (Banxico) of 3 percent. In the country where the highest inflation in the last 20 years was recorded, the increase in agricultural products and energy prices is among the main causes of high inflation.
In Argentina, where inflation rates have been in double digits since 2005, inflation for last December has not been officially announced yet, but annual inflation is 51.2 percent as of November.
According to IMF forecasts, inflation in Latin America will fall by 1.5 percent this year to 7.8 percent.