May 23, 2011
May 23, 2011 (Latin America Data Byte)
En Español
By Rebecca Ray
In April, prices rose at an annualized rate of 4.2% per year, down from 15.2% per year in March and 20.0% per year in February.
Bolivia has released its Consumer Price Index (CPI) for April, showing a stabilization of prices compared to March. The National Institute of Statistics (INE) release shows April’s CPI at 2% above March’s level, but by seasonally adjusting the data we can take a closer look, comparing that rise to previous months’ trends.
The seasonally-adjusted series rose at an annualized rate of just 4.2% per year. This is down from a 20.0% annualized growth rate in February. This change hasn’t shown up yet in the year-over-year rate, which is essentially unchanged from March, having fallen from 11.1% to 11.0%.
Note: Data from before and after March 2008 are not strictly comparable because of a methodology change.
Much of the recent run-up in prices has been concentrated in the most volatile sectors: food and energy. Monetary and fiscal policy designed to counter inflation has limited effect on food and energy prices, because they are mostly a result of rising world prices, outside of the control of local authorities. Excluding these two categories gives us core inflation, which is less volatile and more relevant to economic policymaking.1
Note: Data from before and after March 2008 are not strictly comparable because of a methodology change.
Core inflation has followed a similar pattern to overall inflation, but with much less variation. On a seasonally-adjusted, annualized basis, the latest monthly peak was roughly 15 percent, compared to 20 percent for headline inflation, and core inflation has fallen to 5.5 percent (as compared to 4.2 percent for headline inflation). However, both measures now show two months of steep declines in inflation, which indicates that inflation in Bolivia is probably trending downward.
Note: Data from before and after March 2008 are not strictly comparable because of a methodology change.
1. INE releases price data by component. To estimate core inflation, we exclude the categories covering food, transportation, and household expenses including fuel.
