Analysts at Banco de la Repubblica say inflation will be 0.90% in March

On March 15, Banco de la República published a monthly survey on the expectations of economic analysts, which shows the forecast for inflation in Colombia.

According to EME, inflation in March will be 0.90%, and in December 2022, according to the average, it is expected to be 6.46%. Analysts also say that by March 2023, inflation for the third month of the year will reach 4.55%.

In the case of inflation without food, Banco de la Repubblica estimates it will be 0.65% by the end of March. The forecast for December 2022 points to 5.39%, but by March 2023 it will reach 4.16%.

According to the survey, the expectation for the representative market interest rate (TRM) this month is 3,822 pesos, and in December of this year it is 3,757 pesos. For interest rates, issuers expect to reach an average of 5.27% by March 31, with a minimum value of 4% and a maximum of 6%.

Inflation in Colombia in February surprised almost everyone, including Roberto Steiner, co-director of Banco de la Repubblica. During February, consumer prices rose 1.63%, triggering an annual indicator of 8.01%, which is far from the target of the issuing bank of 3%.

The rise in inflation in Colombia is explained by the crisis caused by international shocks caused by problems in the supply chain and the conflict between Russia and Ukraine. The crisis caused by the conflict between Russia and Ukraine added the impact of the wave of protests last year and a 10% increase in minimum wage at the regional level.

After acknowledging that the sharp rise in oil prices “will have an adverse effect on the Colombian economy,” Steiner stressed that “expectations are rising and are a cause for concern.”

In the face of inflation pressure, analysts believe that the central bank will strengthen the size of the rate hike at the March meeting from the current 4% level to about 125 basis points to 5.25%.

Inflation, which soared in 2022, is doubling the impact on households 1, 2, and 3, especially due to food growth, which has been exacerbated by rising dollar prices.

In the television news report Noticias Uno, they reviewed inflation data from the last two years and found that they had twice as much impact on the lowest income population in the United States.

According to the data analyzed in the news, the increase in the consumer price index (CPI) in 2020 was 1.61%, with prices rising by 41% for high-income groups, and 94% for people with lower incomes.

In 2021, the CPI was 5.62%, up 21.9% for high-income households and 56% for the most modest.

In that media, they consulted Jairo Villabona, professor of economics at the National University, to explain why this phenomenon affects the poorest families twice as much.

“Inflation is the tax of the poor. When inflation rises, it seems as if people are taxed, but the most serious thing is that this tax is higher for people with fewer resources.” He said.

In Noticias Uno they explained that the surge in the consumer price index was directly related to the increase in food prices, which reached 19.94% in January 2022, and that families who received 1'200,000 pesos in January 2021 and spent 600,000 pesos on food should allocate 719,640 pesos this year.

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