LatinNews Daily - 12 July 2022

In brief: Bolivia’s inflation remains low

*Bolivia’s central bank (BCB) has released new figures which show monthly inflation was 0.39% in June, bringing the annual rate to 1.79%. While up from 1.41% in May and the highest annual level in a year, the June rate is still among other lowest in the region. Bolivia closed 2021 with the lowest inflation in South America, with an annual rate of just 0.9% in December, and a monthly rate of 0.16%. Various theories have been proposed for this remarkably low rate in a country with a history of hyperinflation, which topped 20,000% in the mid-1980s. The left-wing Movimiento al Socialismo (MAS) government led by President Luis Arce has attributed the low inflation to the application of a productive community-based social and economic model (MESCP) which has been implemented since the MAS took office under former president Evo Morales (2006-2019), in which the State takes on the role of main driver of economic growth and social progress. Another suggestion is that the fixed exchange rate has cushioned the country from the impact of rising inflation in the US and the slowdown of the Chinese economy. Perhaps more importantly, as a gas-exporting nation, Bolivia has been relatively protected from the energy shortages that are impacting prices around the world. Yesterday Economy & Finance Minister Marcelo Montenegro said that the government was maintaining its projection for this year that inflation would close at 3.3%.

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