One of the news of the week was undoubtedly the entry of inflation in Colombia into a scenario of stagnation, in which although it still marks setbacks compared to the historical levels it reached in 2023, the force of its fall is increasingly smaller. , while this trend is expected to last at least two months.
The first thing to say on this topic is that according to Dane, the Consumer Price Index stood at 7.16% in the month of May, a figure that can be read in two ways, since on the one hand it marks a decline compared to 12.36% of the same period last year and on the other it remains at the same level as what was achieved in April.
Restaurants iStock
To explain this stagnation in another way, it must be said that in February it entered the 7% range, (7.74% to be precise) and since then it has remained there to date with 7.36% in March; and 7.16% in April, repeating this value in the May reports. With this it is clear that inflation is falling, only with less force and this is a point on which experts demand close attention.
Read here: Colombia is the third country with the worst unemployment rate in the OECD
Thus, for Alejandro Reyes, economist at BBVA Research, One of the points to take into account is that annual food inflation continued to increase, in line with expectations, and stood at 4.4% (+140 basis points bp).
Inflation AFP
“This increase was associated with a strong base effect, since in the same period of 2023 monthly food inflation was -0.85%. As for products, a strong increase in the price of potatoes, bananas and some fresh fruits stands out,” he explained.
More information: Labor reform suffered a severe setback in the Chamber votes
Although the good news is that the cost of living in Colombia has fallen for 14 consecutive months and in its May report it fell 520 basis points compared to the same month last year, one of the aspects that drew attention is that although Some foods go down in price, eating out at restaurants is still very expensive.
Waiters Courtesy Mastercard
This is evident in the discrimination by types of expenditure in the Consumer Price Index in which first place is occupied by education, with an annual variation of 11.42%, and in second place is the category of restaurants and hotels, with a variation of 9.76%. The first three positions are completed by accommodation and public services, which showed a variation of 9.76%.
You may be interested in: LPG imports would go from 10% to 50% in the coming years
“In May 2024 compared to December 2023, the variation of the subclasses that contributed the most to the year’s total were: imputed rent (4.22%), effective rent (4.34%), meals in table service and self-service establishments (5.12%), urban transportation ( includes train and metro) (7.54%), fresh fruits (21.07%), electricity (5.18%), vehicle fuels (5.44%), preschool and primary basic education (9.17%) , potatoes (28.56%) and meals prepared outside the home for immediate consumption (4.60%),” said Dane.
Restaurants Diego Santacruz/ EL TIEMPO Archive
In simpler terms, the greatest pressures on the cost of living for Colombians at this time do not come from food, since the upward influence is on rent, transportation (gasoline prices) and going out to eat in restaurants. , the latter being an expected effect due to the price of food and increases in public services.
Other news: Cut to the 2024 Budget would be above $20 billion from the Minhacienda
“The services basket registered an annual variation of 7.95%, with a decrease of just 7 bp compared to the previous month. The monthly inflation of the basket continues to be high, at 0.62%, still affected by a high rental inflation, of 0.75% for the month, well above its average for the month of May (0.39% )although lower than what was observed in 2023 (0.92%),” said Alejandro Reyes.
wallet IStock
With this in the picture, BBVA Research expects inflation to remain around the current level for one more month before resuming its downward path, partly due to the base effects in food inflation, some current climate shocks and the persistence in services. For the second part of the year, inflation will continue to reduce until closing the year at 5.4%.
