Lower dynamics of consumption is already noticeable due to high inflation

The effects of inflation of 1.67% registered in January are already reflected in the less dynamic consumption at the beginning of 2022. This is what Fenalco and Raddar warn, in their respective monthly reports on the evolution of merchant sales and regarding the performance of household consumption.

(The products of the basic basket most affected by inflation).

Jaime Alberto Cabal, president of the trade union, said that “the behavior of sales in January shows a slight decrease compared to the great dynamism that we had compared to the first quarter of the year, especially in December”.

According to the National Federation of Merchants, Fenalco, this situation is also a consequence, especially, of the rising cost of inputs and in general imported goods.

For Cabal, the situation is more noticeable in the commercialization of mass consumption products in supermarkets. Promptly, food, groceries, drinks and toiletrieswith those of less impulse.

“This is a sign that the inflationary effect is beginning to be seen in the loss of dynamism in consumption,” Cabal commented, while pointing out that it also reflects the climate of uncertainty that the country is experiencing, typical of this first semester of elections.
According to the survey of Fenalco to their affiliates, 43% affirmed that their sales during the past month of January increased; While that 24% assured that they decreased.
The foregoing shows a deterioration compared to the performance of December, when these indicators were 58% and 5%, respectively.

(Debt target of 62.7% in 2022 would face pressure).

When entrepreneurs in this sector are asked about their expectations for the coming months, 46% declare themselves optimistic and believe that the situation will improve, while another 54% believe that the outlook will not change or will worsen.

Another phenomenon that worries trade has to do with the employment generation by 2022.

For Fenalco the situation is complex. According to the Economic Log, 41% of businessmen stated that this year the personnel employed will not go up or down. For its part, 14% said there will be payroll cuts and 45% will increase the number of contracts by some percentage.

LESS PURCHASES
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While less dynamic sales are reported in commerce, households perceive that they start the year buying less.

This is how the firm’s first report of 2022 reviews it raddar on the behavior of household spending in January.

He mentions a worrisome escalation in the perception of purchases, “stating in 68.04% of cases that they were able to buy fewer things than the previous month.”
Likewise, he warns that this “is a figure never before recorded in Raddar’s Consumer Track.”

(Elections and inflation threaten consumer confidence).

By cities, Bogota stands out in this aspect with 70.61%, while by income levels the greatest impact is on low-income consumers with 73.19%.
“Undoubtedly, the beginning of the year brings with it a series of challenges in terms of consumption, taking into account the inflationary phenomenon that not only affects perception but, effectively, is affecting the purchasing power of Colombians who closed 2021 with a high level of spending,” he says.

During January 2022, households spent 72 billion pesos, with growth in current pesos of 11.40%, a figure that he considers quite positive if January inflation is taken into account. Discounting the effect of prices, the real growth of households during the first month of the year was 4.16%.

For its part, the value of credit card transactions grew 41%,% in January compared to the same month last year.

Likewise, it points out that if January 2020 is taken as a reference, as the period prior to isolation, In January 2022, all sources of income and expenditure register growth above. For Raddar, this month under analysis is the most difficult in the household spending basket, because the money takes time to arrive since the last payment for many households was in mid-December, and the money they had was spent at Christmas. , holidays and school season.

WHAT DOES THE CONSUMER DO

Faced with the situation, consumers have also changed behaviors. Radar says that households showed a strong change in the return to the promotion hunter.

Although this behavior had been growing at a constant rate – according to Raddar – in January it accelerated its growing trend to figures comparable to those indicated at the end of 2020 and the beginning of 2021 when the reactivation was just beginning.

Likewise, it suggests that this could mean that households once again see their spending capacity compromised and trying to make adjustments. For this reason, he adds, “they could undergo changes in the search for strategies to minimize the impact of rising prices and cost of living.”

BRIEFCASE