ColombiaOne.comColombia newsInflation Continues to Decline in Colombia

Inflation Continues to Decline in Colombia

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Sigue bajando la inflaci贸n en Colombia 10.48% en octubre
Inflation continues to fall: in October it was 10.48% – Credit: Josep Freixes / Colombia One

As expected, inflation continues to decrease in Colombia. For the month of October, the annual Consumer Price Index (CPI) was set at 10.48%. This represents a month-on-month decrease of 0.51%, even more than economists had anticipated. It is worth noting that the government’s decision not to raise gasoline prices this month played a decisive role in moderating prices.

Year-to-date (January-October), inflation stands at 8.27%, giving reason for optimism regarding the government’s goal to finish 2023 with an index close to 9.5%.

The October increase was mainly driven by rising prices in accommodation and public services (water, electricity, and gas), as well as food and non-alcoholic beverages, which continue to strain family budgets in the country.

However, for October of last year, the accumulated CPI for the first ten months was already 10.86%, during a period of escalating prices that ended with a record-breaking inflation of 13.12%, something unprecedented in Colombia so far this century.

Inflation affects the middle and upper classes more

Examining the values counted to calculate inflation highlights that it disproportionately affects the middle and upper classes. It is the products consumed by these segments of the population that experience the most significant increases.

Although the government decided not to raise gasoline prices for this month, the constant scheduled increases in fuel prices over the past year have had a more substantial impact on precisely the more affluent social sectors. This is a controversial measure: the government chose to stop subsidizing gasoline, with constant increases planned over the next year and a half until the international market value is reached.

Fuel has traditionally been subsidized by the state. However, the current government announced that it would stop doing so, citing the significant fiscal burden of subsidizing a price that, although unpopular, remains below the regional average.

What affects inflation the most: food and public services

In electricity services, the CPI was 7.97%, but it is one of the factors that most contributes to the housing and public services sector. In gas, inflation was 6.92%. Public services are precisely what most affects the pockets of Colombian families. In September, they were the most affected by inflation, surpassing food.

Although the trend is starting to decrease, the other concern is the price of food and non-alcoholic beverages. In this regard, potatoes and avocados were the products that increased the most. These foods reached an annual variation of 28.61% and 20.97%, respectively.

On the other hand, vehicle purchases were at 9.43% and are trending downward. In urban transportation CPI, there was a 11.64% increase mainly due to taxi services.

As for air transportation, the variation suffered a setback of -3.75%, mainly due to the planning of the December and January holiday period.

C煤cuta, Monter铆a, and Valledupar where inflation is highest

Annually, the cities of C煤cuta, Monter铆a, and Valledupar have experienced the highest annual inflation growth. Cucuta has the highest levels of inflation, with 11.40% on an annual basis. It is followed by Monteria (11.23%), Valledupar (10.88%), and Barranquilla (10.83%). The lowest variations, on the other hand, were recorded in Villavicencio (8.69%), Pereira (9.67%), Ibague (9.69%), Santa Marta (9.75%), Riohacha (9.86%), and Manizales (9.90%).

Regarding Bogot谩, the annual indicator closed at 10.78%, above the national average; and in Medell铆n, the data was 10.23% annually.

New request to lower interest rates

With these inflation figures, even better than anticipated by all analysts, the government has once again asked the Banco de la Rep煤blica to reduce the interest rate. It is worth noting that the central bank has not decided to start the de-escalation of a vital economic item for growth. Since May, the rate has stood at 13.25%, imposing significant pressure on the national economy.

The central bank’s objective is to keep inflation in check. These encouraging data finally open the possibility of initiating a timid descent before the end of the year, something that the government, opposition politicians, and business leaders have been requesting for months.


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