Colombia Ends November with an Annual CPI of 10.15%

Colombia ends November with an annual CPI of 10.15%, a figure that will serve as a reference for the increase in the minimum wage in 2024 in the negotiations currently underway and set to conclude before December 15. November’s negative inflation confirms the descent seen over the past few months, although the figure remains high, and forcing a greater decrease will be one of the economic objectives for the coming year.

With this data, the decrease over the last 30 days was 0.47%, slightly less than expected, leaving the figure still in double digits, with the inflation rate for the first 11 months of 2023 standing at 8.78%.

To determine the definitive value of the wage that more than 60% of formally employed Colombians will receive starting in January, November’s CPI is one of the most critical variables. So far, four meetings have been held, but an agreement seems distant as the positions between unions and employers are still far apart.

Inflation Predictions Confirmed

The inflation figure released today by the National Administrative Department of Statistics (DANE) confirms the forecasts that the government and social agents had been working with. With this penultimate data of the year, it seems challenging to fulfill the Finance Minister Ricardo Bonilla’s prediction, who recently stated that Colombia would end 2023 with an inflation rate of around 9.23%.

Similarly, Bonilla pointed out that they must be very careful to avoid an inflation spike in January when a rise in tolls across the country is scheduled. A similar situation is expected in July 2024, with a second increase planned. According to the minister, these hikes should not affect inflation.

However, other economic sector agents are not as optimistic and project this figure at around 9.7%, a number that, judging by the November data, seems to be closer to what might happen by December 31.

Inflation by Categories and Capital Cities

The expense divisions that had a higher annual variation than the average were transportation (16.54%), restaurants and hotels (14.35%), alcoholic beverages and tobacco (12.78%), education (11.41%), and miscellaneous goods and services (10.86%).

Regarding the category of food and non-alcoholic beverages, Piedad Urdinola, the director of DANE, explained: “We are seeing that these major shocks reported for 2021 have been moderated. We are seeing behaviors much more similar to what was happening before the pandemic.”

However, the annual CPI for prepared meats and deli products experienced an increase due to the season. “It almost always has these increases for the month, as people start preparing for the end-of-year festivities and begin buying more of these foods.”

The cities that had the highest variation in the prices of the basic family basket in the last year were Santa Marta (11.56%), Barranquilla (11.43%), Montería (11.39%), Cúcuta (10.98%), Valledupar (10.97%), and Cartagena (10.60%).

On the contrary, those with the lowest variation were Villavicencio (8.01%), Ibagué (8.93%), Neiva (9.40%), Pereira (9.59%), Florencia (9.62%), and Tunja (9.74%).

Annual Inflation, Crucial for Minimum Wage

In the last meeting held on December 4, it was agreed that productivity and the annual CPI through November would be two important variables in determining the increase in the minimum wage starting in January.

Productivity has been a point of contention in negotiations, as there are differences between total productivity and labor productivity. Total productivity, covering various factors, showed a negative figure of -1% for 2023. However, DANE suggested that only worker productivity, calculated at a modest 0.76% for this year, be considered.

“We have a 20-point difference between total productivity and labor productivity. Pro-business governments have left us in the lurch,” stated Fabio Arias, president of the Central Union of Workers (CUT), referring to previous governments in the country.

That is why unions are discussing a tentative 18% increase for 2024, even though the requests from both sides will be revealed on December 12, 2023. However, Labor Minister Gloria Ines Ramirez has been optimistic about reaching an agreement that benefits both workers and employers.

According to experts, the minimum wage, currently at 1,160,000 Col$, will impact not only the 2.6 million directly affected workers but also various economic aspects of the country, including inflation itself. Amid negotiations, the business sector warns that any increase exceeding 10% would jeopardize economic recovery and could put the country back on the path to inflation.