The recent surge in inflation.
Annual consumer price inflation (CPI) declined slightly to 11.72% in May from an 8.5-year high of 11.87% in April. Inflation has fluctuated between 4 and 12% for over a decade, averaging just over 8%. A surge in recent months has provoked renewed public debate and led the government to propose new measures to restrain food prices.
- Banks, companies and households will have to live with the uncertainties and risks associated with high and volatile inflation.
- Risk perceptions will complicate efforts to raise domestic savings, reduce dollarisation, keep down credit costs and encourage investment.
- Reaching agreement on wage and pensions increases may become more difficult, with higher inflation hurting the government’s popularity.