The increase in prices has been felt in recent months in practically the entire basket of consumers, and although food has been in many of them responsible for the increase in inflation, this effect is increasingly strong in all categories of the consumer price index (CPI).
(Read: Colombia, among countries with the highest and most static inflation in the OECD).
To the At the end of 2022, inflation without food registered a value of 9.99%, while subjacent inflation, the annual variation of the CPI minus food and energy, touched a level of 9.23%. The director of Dane, Piedad Urdinola, highlighted last week that, even without these elements, all prices continue to grow, although at a lower level than general inflation.
As Carolina Monzón, economic research manager for Itaú Colombia, explains, the calculation of underlying or core inflation, what he seeks is to try to extract the less volatile components of the consumer basket.
This is also with the objective of identifying those items that are most reactive to the interest rate, since they are more linked to the demand and performance of households, like housing or entertainment, for example.
“There are other effects that may be exchange rate, demand, logistics factors that are affecting inflation, but are not related to food or government measures in terms of regulated“, said.
And he mentioned that “this may also be a sign that there is a lot of traction from inflation due to other items in the basket, such as entertainment, health and education, which reflect additional pressures.”
(Read: Winners and losers with inflation of 13.12% in 2022).
Secondly, Sergio Olarte, Principal Economist at Scotiabank Colpatria, explained that “subjacent inflation or basic inflation is a measure to which the Bank of the Republic pays a lot of attention because it is those items or inflation for which, in theory, monetary policy is much more effective.”
According to the economist, there are elements of inflation that are so directly affected by the interest rate, such as food, which is more linked to situations related to weather or transportation; or regulated goods, such as electricity, gas or gasoline.
“That it continues to rise in this way means that demand inflation continues to be very high. For this reason, we believe that this January 27th, the Banco de la República could raise its interest rate by even 1 percentage point, up to 13%.”, indicated Olarte.
(Also: Prices continue to exceed forecasts: adjustments to be expected).
The prospects for this year expect prices to remain high in different branches. The US bank JP Morgan issued a report on Colombia, in which it mentions that, in terms of subjacent or core inflation, it considers that the prices of services will soar even more in indexation effects after the 16% increase in the minimum wage.
Although the bulk of inflation in 2022 was given by elements such as food, with a contribution of 4.88 of the 13.12 points of inflation in 2022 and a variation of 27.81%, if we look at other categories, also excluding energy, several have played an important role in the CPI variation.
Meals outside the home although they are also related to food, they contributed 1.25 percentage points to inflation; private vehicles contributed 0.58 points, and imputed leases represented a contribution of 0.50 points.
Other items that also had a significant weight in inflation in 2022 are cleaning and maintenance products, with a contribution of 0.45 points to inflation, personal hygiene items, with 0.25 points, men’s clothing (0.14), personal care products (0.14) and pharmaceutical and dermatological products (0.12).
Laura Lucia Becerra Elejalde
