Strong rains flooding agricultural land and washing away roads in Colombia will increase inflation but not so much as change consumer price targets, officials said on Monday.
Bad weather has affected commodity-producing countries worldwide, from rains stalling the wheat harvest in Australia to dry spells in some of Argentina’s soy-growing areas and oil refinery outages in OPEC member Venezuela.
In Colombia, downpours blamed on the La Nina weather phenomenon have pounded the Andean nation in recent months, damaging infrastructure, water-logging farmland and hitting top foreign exchange earners like coffee and coal.
“It’s inevitable that this happens, not to the point where inflation spills over into unmanageable proportions, but yes it’s inescapable that food prices are going to go up in these months,” Agriculture Minister Juan Camilo Restrepo said.
Finance Minister Juan Carlos Echeverry said on Monday the cost of the rainy season could be near $1 billion — and the government is expected to declare a state of emergency to be able to spend more money.
The first inflationary impact of the heavy rains — which the government’s weather office expects to last into the first quarter of next year — was felt in November when consumer prices rose 0.19 percent, double market expectations.
“Up to November, food prices had been surprising on the downside and are still only up 2.4 percent year-on-year, but adverse weather conditions and increasing demand from Venezuela are likely to keep food prices under pressure over the next couple of months,” said Alberto Ramos of Goldman Sachs.
Low inflation expectations have allowed Colombia’s central bank to keep its key interest rate at historic lows of 3 percent since April to boost consumption and spur economic recovery after being hit by the 2009 world financial crisis.
“The inflation effects, I don’t believe, will be that big, but they are visible anyway. To some extent the CPI in November was affected. December’s probably will be also,” Echeverry said on local radio.
The precipitation has inundated around 800,000 hectares of crop and pasture land in Colombia, blocked roads and also hit the coal mining sector where major producers of thermal material use open-pit mines, which are more prone to flooding.
Colombia, the world’s No. 1 producer of high-quality washed Arabica coffee, also expects rains to impact its crop this year due to blocked roads and next year on fears that plantations will not have enough sunlight.
DEATHS, STATE OF EMERGENCY
Bad weather has killed at least 170 people in Colombia this year and made another 1.5 million homeless. The government says that number could rise to as many as 2 million people in one of the worst natural disasters in the country’s history.
Up to 145 people were buried after a sodden hillside collapsed in northwest Colombia on Sunday. Rescuers have recovered 12 bodies. In Venezuela, rains have killed some 32 people and forced 70,000 from their homes.
Colombia’s government has already called a public calamity in 28 of the nation’s 32 provinces, and President Juan Manuel Santos canceled a trip to climate change talks in Mexico.
(Nelson Bocanegra and Jack Kimball / Reuters Africa)
