The Minister of Finance, José Antonio Ocampo, announced the Government’s measures to curb the high inflationary figures recorded by products and services in Colombia. One of these is to de-index all products that rise based on this adjustment from the minimum wage.
(Minimum wage: warn that excessive increase would impact employment).
So, what is price deindexation? According to Jeisson Balaguera, CEO of Values AAA, there are products and services that have risen in an ‘atypical’ way. For this It is proposed to remove them from the calculation of inflation and the increase in the minimum so that there is not a significant impact within the average.
The foregoing, mainly, “in order to have a slightly more real inflation to the process of increasing prices that the country would be experiencing,” says Balaguera.
(The cancellation of new housing projects increases).
“The Government would seek that the percentage increase in the minimum wage for 2023 does not represent, at the same time, an increase in the costs of basic basket products, services or rent that are calculated after the salary increase,” he adds.
But, will this measure proposed by the Government work? It would be useful, according to the expert, as long as essential products and services for the country, such as gasoline, are not excluded.
(These are hikes to look out for in 2023.)
“It would also be useful as long as it does not have a significant impact on inflation. For example, in the case of gasoline, if it has risen by 30%, it would be complex to remove it from the calculation because gasoline is a primary consumer good that impacts on many sectors. So, if it should be taken into account”, he concludes.
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