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Latin America will close 2021 with the highest inflation in the world

The increase in food, public services and gasoline directly affects the poorest sectors of the region

Darwin Nexans
5 min read
Latin America will close 2021 with the highest inflation in the world
Venezuela's inflation reaches almost 2000%

The inhabitants of the different countries that make up the Latin American region have seen in recent months how the cost of living rises practically every day, and incomes are falling each time, so families must look for alternatives to face the growing inflation day by day.

In the month of October in Argentina inflation rose to 52.1%, in Brazil 11.1% and in Mexico 6.2%, Chile 6%, Peru 5.8% and Colombia 4.5 %, compared to the same date in 2020, which is why economists point out that the Latin American region in general will close 2021 with the highest inflation in the world.

The United States has also been affected by this situation, since recently Joe Biden announced that the country had registered an inflation of 6.2% in the month of October, the highest in 30 years.

This phenomenon is basically evidenced by the depreciation of the different currencies of the countries of the region, and the recovery of consumption; but it is also due to difficulties in supply chains and the increase in the price of food and energy.

The expert on Latin American issues, Benjamin Gedan, has pointed out that this situation is a danger for Latin America, while asserting that the future that the region is aiming for is one of high inflation and low growth, which leaves "gloomy" prospects for it. Side of the world in recovering from the pandemic, which has also hit economies hard.

Food and gasoline are the most affected items in the region

The products that have been most affected in the area with high inflation are undoubtedly food, gas, gasoline and electricity, affecting the families with limited resources the hardest.

Latin America will close 2021 with the highest inflation in the world

In the case of Mexico, the price of cooking oil rose 32% in October when compared to October last year.

The avocado, a fruit widely used in the Aztec country, has also registered an increase in its cost, as well as domestic gas, however, the price of the latter has been controlled by the government of Andrés Manuel López Obrador, who set a maximum limit for the sale.

On the other hand, in Brazil, according to a BBC report, inflation, which reached 11.1%, has been the highest in 19 years.

In the Rio de Janeiro country, food, clothing, gasoline, and electricity are the most affected. In addition, the fall in the exchange rate has strengthened the crisis in the increase in prices, and low incomes.

The increase in electricity rates in Brazil is mainly due to the fact that the country has had one of the largest droughts in the last 100 years, which has impacted on hydroelectric generation.

Argentina has the second-highest inflation in the region, only surpassed by Venezuela where it reaches almost 2000% according to figures from the Central Bank of Venezuela.

Latin America will close 2021 with the highest inflation in the world

But the case of Argentina has attracted attention, since it is the third-largest economy in the region, and exceeds five times the inflation of its Brazilian neighbors, and more than eight times that of Mexico. According to the economic reports of the southern country of the continent, costs increase 1% every week, and directly hits the pocket of the Argentine people.

As in the rest of the Latin countries, the products that have risen the most are beverages, food, footwear, clothing and health services.

To face this, the government of Alberto Fernández, ordered to freeze the prices of some 1,400 products of the basic basket last October until January 7.

In Chile, the services most affected by inflation are air transport, tourist packages, as well as gasoline and liquefied gas. The Central Bank of the southern country has raised the interest rate to see if it manages to stop the rise in costs.

In Peru, the basic food basket rose 5.8% in October, mainly because the nation imports a large part of its corn, wheat, soybean oil and diesel.

Latin America will close 2021 with the highest inflation in the world

In Colombia, housing, water, electricity, gas, food and non-alcoholic beverages are the ones that have been more expensive.

According to reports, the food items that have been most affected by inflation are fruits, meat, milk, edible oils, tomatoes and potatoes.

Despite the fact that the governments of these countries have been taking measures, which in some cases have been classified as aggressive, as is the case of Chile and Brazil, in general terms, they will have to adopt stricter monetary policies, to face the rise in costs of money, which is one of the causes of inflation.

Likewise, economists assure that "the average regional growth rate in 2022 will be 2.5%", which shows that the near economic future will be full of difficulties such as the increase in poverty.