Colombia Forecasts 5% Inflation by the End of 2024

Colombia expects inflation to reach 5% by the end of 2024. This was revealed today by the Minister of Finance, Ricardo Bonilla, in a statement in which he explained that 2023 closed with a CPI below 10%, a figure that will be officially known in a few days. The minister also stated that between 2023 and 2024 Colombians will gain 13 points of real purchasing power, based on adjustments to the minimum wage and inflation.

Throughout yesterday there was a political controversy on social networks between former President Ivan Duque and current President Gustavo Petro, in which both claimed the highest increase in the minimum wage in the country. In this controversy, Minister Bonilla added his opinion, announcing a good year for the purchasing power of Colombians and citing both low inflation and the decrease in interest rates, which already began last December.

Bonilla recalled that in 2023 the minimum wage was increased by 16%, and inflation would have ended at around 10%, 6 points lower, “which is an effective gain in purchasing power.”

Fight in networks for alleged merits

Shortly after the announcement on December 29th, in which President Petro announced a decree increasing the minimum wage in Colombia by 12%, all kinds of reactions followed. The first was that of the head of state himself, who boasted on social networks that his government has achieved the highest increase.

“In the year 2023 alone we managed to increase by 6.5% the real minimum wage above the price level, we absorbed the fall left by Duque and increased 3 points more. This year we have increased by 12.5% the nominal minimum wage. We hope that at the end of the year it will gain 6 real points. It means that in two years of government we have raised the standard of living of the 2.5 million families that receive a minimum wage, the millions of families that manage to just get by with it, by 12%,” Petro wrote on his X account.

Quickly, former president Duque (2018-2022), alluded to in Petro’s comment, responded to the current president, criticizing the high inflation experienced by the country and contradicting the head of state on how a wage increase is calculated on the inflation of the year that ends, not on that of the coming year, which is not yet known.

“The real increases achieved in our government continue to be the highest in the recent history of the minimum wage in Colombia,” the former president claimed, citing the low inflation and economic growth of many of his years as president.

“The minimum wage is increased with the inflation observed in the year coming to an end, not with that of the following year that no one knows. This is in order to recover the purchasing power of the observed inflation,” said the former president.

Fight against inflation

Meanwhile, sources from the Ministry of Finance stated that the government is working with an inflationary horizon of 3%, which is expected to be achieved by 2025. For this year that has just begun, the minister affirmed that the country will achieve an inflation of around 5%, which would mean practically a 50% reduction with respect to the 2023 closing data.

“In 2024, inflation is expected to continue falling to 5%, which means gaining, in addition, 5 points of purchasing power by controlling inflation, plus the 1.9 that rises above the inflation of 2023,” assured Ricardo Bonilla, taking into account the minimum wage increase for this year of 12%.

With these data on the positive differential between the increase in the minimum wage and inflation, and also taking into account last year’s figures, the minister affirms that the real purchasing power of Colombians will increase by 13%.