One of the most striking aspects of Latin America over the past two decades is the reduction of inflation. In a region known for hyperinflation in the mid to late 1980s, inflation came down not only to single-digit rates but to less than 5% – on average – in 2006, its lowest rate in half a century.
Only two countries in the region have double-digit rates: Venezuela’s hovers around 20% while Argentina’s is closer to 10% (though price controls exist over some key goods and public utilities). Price controls, increased domestic liquidity and populist policies are elements tied to severe bursts of inflation in the region’s recent past, and have led some pundits to wonder whether high inflation – and even hyperinflation – may be on its way back to Latin America.
