The first quarter of 2023 closed with inflation above forecasts. The first three months of the year accumulated an increase in prices of 4.56%, and annual inflation to March was 13.34%according to the figures revealed last week by the Dane.
(Read: Expenses that are weighing the most on the cost of living of Colombians).
Although for the rest of the year the indicator is expected to lose pace and begin to slow down little by little, the truth is that it will remain above double digits for several months. The latest expectations survey, carried out by Banco de la República among 35 market entities, revealed that the inflation expectation at the end of the year is 9.26%, while the Fedesarrollo Financial Opinion Survey for March indicated a data of 9%.
Food has been the item that has boosted prices the most in recent months , and although the category maintains an inflation of 21.81%, it has already started to slow down. However, now there are other items that will keep inflation high.
Bancolombia, for example, points out that the downward trend in food prices will persist throughout the first semester, or July, the month in which an El Niño climatic phenomenon could begin. This is due to the lower volatility of the exchange rate, the reduction in the price of fertilizers and the return of maritime freight to 2019 prices.
(Also: Would high-denomination bills help curb inflation?).
But on the other hand, according to the bank, the persistence of the indexation effect in the services category and the greater pressures in the regulated items would mean that the gains in food are not fully translated into the total variation of the CPI.
On the services side, the greatest pressure would come from rents, while in Regulated increases in gasoline would boost levels.
“The leases are tied to last year’s inflation, which was 13.12%, and the contracts are renewed throughout the year, and in addition, it is one of the items that weighs the most in the basket. It is a very important field”, explained Andrés Langebaek, executive director of economic research at Grupo Bolívar-Davivienda.
Langebaek projects that towards the middle of the year inflation it will be close to 10% and towards the end of the year towards 9%.
On the other hand, Munir Jalil, head of Economic Research for the Andean Region of BTG Pactual, assured that inflation will remain constant, but high, for several months.
(Read: Inflation: what is a refuge asset and how it helps to invest in housing).
“The behavior of inflation from now on will continue to be marked by what we saw in March. Food inflation that should continue to fall, and in some way, due to inflation in the rest of the components, such as regulated items, which will continue to be very high, and will begin to fall in the second half of the year, albeit slowly, and rather associated with the economic slowdown”, explained the economist.
The expected CPI ceiling
For several economists, If February was not the peak of inflation, March certainly was. “Surely it peaked and we are going to stay with high inflation for a long time. However, it already seems that the elements that were pushing it strongly last year are fading,” said Sergio Olarte, Scotiabank’s chief economist.
But for others, it is not so. “It is better to look at this as a plateau, because we are going to stay at a high level for several months and we will see a period of stability”Khalil assured.
LAURA LUCIA BECERRA ELEJALDE
Portfolio Journalist
