Colombia accumulates in 2022 the highest inflation of this century

People buy fruits and vegetables, in the Paloquemao market square, in Bogotá, on June 29, 2022. Nathalia Angarita

The cost of living in Colombia has risen again.

For September, the National Department of Statistics (DANE) reported an increase of 0.93%, and, with this, the country accumulates the highest inflation of this century so far this year.

To find cumulative inflation of a similar magnitude, you have to go back to 1999, when the country was going through the worst financial crisis it has faced in its modern history.

The current rise is driven by multiple factors.

The cost of drinks and food is the one that has contributed the most throughout the year.

As of September, a little more than a quarter of the registered inflation was explained by this increase.

Basic food products of the family basket such as eggs, rice, and fresh fruits accumulate an inflation of approximately 33%, 31% and 29%.

If food is removed from the account, the accumulated inflation for 2022 would have been 8.32% and not 11.4%.

Since the poorest households spend a higher percentage of their income on food, for this population group the cost of living increased much more.

Inflation for these households was 13.16%.

The cost of public services, water, gas, electricity and fuel is the second item that has contributed the most to the increase in the cost of living so far this year.

In mid-September, the Government of Gustavo Petro announced that for next year the energy and gas regulatory authority (CREG) will make an adjustment to the formulas with which the price of electricity paid by households is calculated, in order to to reduce electricity rates.

But it also began to make an increase in the price of gasoline this year, which in October began to cost 200 pesos more (4 cents on the dollar).

Both decisions will weigh positively and negatively on the cost of this item, which as of September weighs 15% of the year's accumulated inflation.

All the items measured by DANE, except for information and telecommunications services (which includes telephone and internet expenses), have risen in price in 2022. The border city with Venezuela, Cúcuta, is the one with the highest inflation.

Following on the list are the Caribbean cities of Santa Marta, Valledupar and Riohacha, all with inflation above 14%.

A call to action

Colombia is not the only country facing an inflationary phenomenon of great magnitude.

Brazil, Chile and Peru have also registered historically high figures.

Brazil, however, began to register a slowdown in its figures in September, in part due to a strong policy of its central bank to raise interest rates.

Precisely, last week the Colombian Minister of Finance, José Antonio Ocampo, said at the end of the meeting of the board of directors of the monetary authority, the Banco de la República, that he was frustrated by the inflation figures recorded in recent months.

Although he also said that he is optimistic and that he expects a reduction in the numbers in the coming months.

As this optimism was not reflected in the data for September, calls are beginning to be heard for the Government to make concrete decisions to curb inflation.

Until now, the issue has not been at the center of the government's economic agenda, more focused on tax reform and a change in the economic model, but it could become the main debate.

For the analyst and director of the economic newspaper Portafolio, Francisco Miranda, the discussion has focused on the tax reform that the Government filed in the Congress of the Republic on its first day.

But inflation is beginning to become a central issue, due to the weight it has on its voters: "The economic expectations for the people, with the change of government, were very high."

On Twitter, the former Minister of Finance of Juan Manuel Santos, Mauricio Cárdenas, commented that the figures revealed today by DANE are a serious problem.

"The honeymoon is over," he said.

The economy will force the political debate to land.

Annual inflation to September at 11.44% is a serious problem.

• There is no effective social policy with high inflation.

• The honeymoon is over.

The economy will force the political debate to land.

– Mauricio Cárdenas S. (@MauricioCard) October 5, 2022

If it does start that debate, it will have as its first stage the discussions on the tax reform project that will start in the coming weeks in Congress, and they may impact it.

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