How Colombia was spared from high inflation

Colombia was the only major South American economy that did not experience very high or extreme inflation rates. Since records began, Colombia has never had an annual inflation rate over 50 percent.

However, the value of the Colombian peso had continued falling relative to stable currencies during that time. At the start of 1985, one U.S. dollar could buy 116 Colombian pesos. By the end of 1992, the U.S. dollar exchange rate had reached 738 pesos. This represents a devaluation of 84 percent relative to the greenback in eight years.

The main cause of relatively low inflation compared to other major economies in South America remains unclear, and it was unusual for Colombia to experience such low inflation rates during the Latin American debt crisis.

In contrast, Argentina, Bolivia, Brazil, and Peru experienced annual inflation rates of over 1000 percent, probably because of printing money to pay off debts, which is moronic to do because it just aggravates inflation. Maybe Colombia never ramped up their money printing during the debt crisis.

Chile experienced very high inflation rates during the 1970s (including an annual rate of about 600 percent in 1973).

Venezuela started experiencing high inflation from the 1980s and continued into the 1990s.

Latin American emerging market currencies can be unstable and lose value in case of an economic crisis.