July 17, 2008 / 10:37 PM / 11 years ago

UPDATE 1-Colombia May industrial output down 4.3 pct yr/yr

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BOGOTA, July 17 (Reuters) - Colombian industrial production fell 4.3 percent in May versus the same month last year due in part to a dip in car production, the government’s statistics office said on Thursday.

The weakness in industrial output could lessen chances of a central bank interest rate increase this month.

Colombia’s economy is expected to slow to 5 percent this year, according to government estimates, compared with 7.5 percent in 2007. The slowdown is pointed to by some central bank policymakers as their reason for not wanting to raise interest rates.

The bank is expected to raise its key rate 25 basis points to 10 percent at its July 25 policy meeting in a bid to combat above-target inflation.

“This weak industrial production figure will make it harder for the rate hawks at the central bank to tighten policy,” said Camilo Perez, chief economist at Banco de Bogota.

“I still think they are going to raise rates but I am not as sure as I was before this figure came out,” he said.

Retail sales in the Andean country edged 0.4 percent lower in May compared with May 2007, a statement from the government said. (Reporting by Javier Mozzo, writing by Hugh Bronstein; Editing by Diane Craft)

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