Inflation Experiences in Latin America, 2007-2008

This paper looks at the inflation experiences of 10 Latin American countries: Brazil, Mexico, Venezuela, Colombia, Chile, Peru, Ecuador, Guatemala, the Dominican Republic and Bolivia between 2007 and 2008. The authors construct a core inflation index (excluding food and energy), and look at three-month changes in both headline and core inflation. They conclude that macroeconomic policy that does not take into account the temporary nature of these price shocks may result in an unnecessary slowing of growth, with reduced output and employment.

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