During the month of June, the prices of the basic basket of Colombians continued to rise, and as reported this week by the National Administrative Department of Statistics (Dane), the consumer price index (CPI) showed an increase of 0.51% in the sixth month of the year.
Unlike in recent months, in which the category of food has been the one that has placed the greatest weight on household accounts, rents and public services became the item with the greatest impact on inflation this time, by contributing 0.17 percentage points (pps), or 17 basic points, to the total variation for the month. These presented an increase of 0.54% in June.
(Inflation in June reached 9.67%, the highest figure in 22 years).
“It is the first time in the last twelve months that rents and public services explain the highest contribution points, displacing food and non-alcoholic beverages, this means a moderation in food inflation, but also a very important inertia in home public services for their indexing processes that have the regulated formulas of public services”, explained the director of Dane, Juan Daniel Oviedo.
Food and non-alcoholic beverages, on the other hand, contributed 0.12 pps to the monthly variation, despite the fact that their increase was 0.65% in the month.
(‘Everything is expensive’: the foods that raised inflation in June).
However, if the annual inflation figures are reviewed, which reached 9.67% in June and with which prices are compared with those of a year ago, food remains the category with the greatest impact, with a of 3.98 pps and an increase in its IPC of 23.65%. Services follow, with a weight of 1.92 pps in annual inflation and an increase of 5.88% in the last twelve months.
This change in trend between the categories, according to Dane, has to do largely with the Normalization of the prices of some fundamental agricultural products in the Colombian dietwhile upward pressures continue in services.
This has happened with potatoes and plantains in the last two months, and more recently with tomatoes and onions. But despite this, the director of the Dane also highlighted that there are five basic foods that continue to put pressure on inflation, which are meat, chicken, milk, rice, and sugar, which contributed 0.17 pps to the overall inflation.
Public services
During the month of June, for example, the electricity service registered an increase of 1.78%, and the gas service rose 2.35%. Likewise, the water supply increased its prices by 1.14%, garbage collection by 2.1% and sewerage by 0.83%. Compared to the prices of June 2021, what has risen the most in this group is electricity, with an inflation of 19.63%, that of gas is at 14.03%, while the sewerage service has seen increases of 9.13% and the water supply of 11.91%.
From Andesco, the union that brings together public service companies in the country, its president Camilo Sánchez Ortega pointed out how “values have increased fundamentally because throughout the pandemic they remained frozen, for example, the price of a kilowatt and the price of the cubic meter of water. That is why until now these processes are being brought up to date.”
Sánchez highlighted how the world is seeing increases in the energy part for all countries and Colombia is no exception, and that also “in some sectors of the country the charges are higher but this is also due to the fact that gigantic investments are being made that need to be made, as is the case of Electricaribe, and this It has to be transferred to the rate because we had been lagging behind in the process for more than ten years”.
PRICES STILL RISING
For some experts, these are symptoms of inflation that will continue to be high during the second half of the year, and therefore the cost of living for households is higher.
“In general, what we are seeing is that the prices that continue to rise significantly are those prices that no longer have to do with food and that can cause inflation to remain high for a long time. In fact, if we remove the effect of food from total inflation, inflation continues to rise and is already over 6.5%,” said Sergio Olarte, chief economist at Scotiabank Colpatria.
Olarte also highlights that gasoline will start to rise and that can help to have a higher inflation.
Likewise, from the economic studies center Anif, it was highlighted how the rise in public service rates, “which responds to the indexation of contracts, will exert additional pressure on the pockets of all Colombians, and in particular of the most vulnerable.”
For her part, Laura Peña, BBVA Research economist for Colombia, highlighted that “regulated goods and services showed an acceleration of 110 basics in the annual variation, reaching an inflation of 10.3% compared to the same month of the previous year. and reflected a high contribution from divisions such as accommodation, water, electricity and gas”.
LAURA LUCIA BECERRA ELEJALDE
BRIEFCASE
