by Rod Hughes

Central Bank president Francisco de Paula Guttierrez admits that due to food and fuel prices, the bank will be unable to meet its below 8% inflation goal this year. Prices of imports and soaring $90+ per barrel petroleum prices are beyond the bank’s ability to control.

The inflation rate has been, since the early 1980s, running around 10-12% per year. The Bank might still bring it down to the single-digit but the tenor of Gutierrez’s comments did not promise much. Certainly, the rate is far lower than in the early 1980s when the colon nearly collapsed under the weight of a large foreign debt and a catastrophic drop in the world prices for coffee, at the time the number one export. The crisis was met by masterful renegoiation with foreign creditors and the aid of the International Monetary Fund.

The accumulated inlation rate so far this year is 7.65%. The rate for the last 12 months is 9.84%.