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Dealing with inflation on a fixed income
by David Campbell on Dec 27, 2012 at 07:00
Latin America currently faces a tricky balancing act between domestic economies offering little room for rate tightening, and external sources of domestic inflation, such as food prices, that are putting the squeeze on households.
On recent levels of agricultural product inflation, following poor weather and drought this summer, regional inflation is expected to rise from 4.7% to 5.5% by early 2013.
Any substantial improvement in risk appetite would also risk a return to the speculative capital flows that have impacted on domestic pricing in recent years. Having launched currency controls on 2010, Brazil lifted them this year.
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