Transportation costs led inflationary pressures, increasing 2.6% in March and contributing 0.32 percentage points to the CPI. Higher passenger airfares (+15.8%) and international flights (+15.2%) also intensified costs, while bus transportation costs fell. Education expenses rose 5.5% with the academic year’s start, adding further upward pressure. Energy-related components, reflecting the country’s heavy reliance on fuel imports, showed the largest increase at 3.0%. Core inflation excluding volatile food and energy items remained subdued at 0.8%, though economists indicate signals of acceleration.
The Central Bank lowered its 2026 GDP growth forecasts to 1.5%–2.5% versus previous 2%–3% estimates, underscoring the economic drag from higher energy costs. Market analysts at Scotiabank and Coopeuch forecast April inflation could rise between 1.4% to 1.6% monthly, projecting year-end inflation above 4%, considering persistent secondary effects on transport services and food prices. A return to relative global fuel price stability coupled with government measures to reinstate MEPCO or adopt gradual fuel price adjustments will influence the inflation path in the coming months. The Central Bank held interest rates at 4.5% in March but signaled ongoing policy debate amid inflation uncertainty driven by external energy shocks.
This article was curated and published as part of our South American energy market coverage.
