Raddar presented the report on household spending in Colombia during September 2024. According to Gastometry measurement figures, in the ninth month of the year, spending was $87.2 billion. In September 2023, Household spending was $82.4 billion, which meant growth in current terms of 5.76%, continuing the change in trend. In real terms, the annual growth in spending was -0.04%, “accumulating seven months of new adjustment, or 23 months from November 2022.”
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“Since August, household spending has shown a positive change in its trend, driven by the slowdown in inflation in food, durable goods such as household appliances, and semi-durable goods such as clothing and footwear. “This dynamic suggests a recovery towards the last quarter of the year, where many households from September could advance purchases for the upcoming festive and promotional seasons.”explained the Raddar report.
The report also specified that consumption is also favored by the slow, but progressive recovery of credit placement and the boom in remittances in recent months, “which has injected additional resources into some homes in the country.”
“However, the labor market presents lower growth in job creation, which increases unemployment levels and could limit the recovery of spending in some more vulnerable segments. In this context, although spending shows encouraging signs, the reactivation is still fragile and uneven”framed Raddar’s Gastrometry measurement.
Dynamics of real spending
According to the Raddar report, in September, real spending dynamics showed signs of recovery after the sharp contraction recorded in 2023. Although it does not reach the levels of the historical average, the improvement is leveraged by the deceleration of inflation, which has allowed a slight recovery in the purchasing capacity of households.
“This performance also contributed to the decline in the third quarter of 2024 being less pronounced, partially offsetting the contraction observed in July, a month that traditionally drives spending but which this year was affected by a slow reduction in inflation,” reads the report.
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It should be noted that, throughout 2024, household spending has remained in negative territory, although close to a possible recovery, with the last quarter emerging as key thanks to festivities, promotions and discount seasons. However, it is important to point out “the slow reaction of consumption during the year, with greater caution in households and significant changes in some purchasing cycles.”
The trend in the last year
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One of the sections of the report analyzes the trend in household consumption in the last year, as well as for the third quarter of the year, low and middle income households “experienced a deterioration in their economic situation compared to the previous quarter.”
The explanation presented is that this retreat is in line with rising prices on essential goods and services, such as food and utilitieswhich impact these households more markedly because a greater proportion of their spending is allocated to covering basic needs. Compared to the same period of the previous year, “These households show significant improvement, perhaps reflecting a gradual recovery.”
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On the other hand, spending by high-income households experienced an uptick compared to the previous quarter. “This behavior could be supported by factors such as the arrival of the mid-year bonus, lower interest rates, and a relatively stable formal employment environment, which facilitates an increase in the consumption of non-essential goods and services and contributes to a positive dynamism in this segment of the population”, noted the measurement.
JOHANA LORDUY
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