Analysts at Banco de la República indicate that March inflation would be 0.90%

On March 15, the Banco de la República presented the Monthly Survey of Economic Analysts' Expectations, which shows the outlook on inflation in Colombia.

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

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

The survey revealed that expectations for the Representative Market Rate (TRM) for this month are 3,822 pesos and for December this year 3,757 pesos. On interest rates, the issuer expects that on average by March 31 it will be 5.27%, with a minimum value of 4% and a maximum of 6%.

Colombia's inflation in February surprised almost everyone, including Banco de la República's co-director Roberto Steiner. Consumer prices rose by 1.63% during February, which triggered the annual indicator to 8.01%, a far cry from the issuing bank's target of 3%.

The rise in inflation in Colombia is explained by the international shock resulting from problems in the supply chain, as well as by the crisis due to the conflict between Russia and Ukraine, to which the effect caused by a wave of protests last year and the increase in the minimum wage by 10% levels were added at the local level.

“Expectations are rising, it's a cause for concern,” Steiner emphasized, after admitting that the sharp increase in oil prices “will have repercussions that are not favourable to the Colombian economy.”

In the face of inflationary pressures, analysts believe that the Central Bank will intensify the magnitude of the interest rate increase at its March meeting to about 125 basis points to 5.25% from the current 4% level.

Inflation that soared in 2022 is affecting households in the 1, 2 and 3 twofold, especially because of the increase in food and which worsened with the increase in the price of the dollar.

In the television news report Noticias Uno, they reviewed the inflation data for the last two years and found that it impacts the lowest income population in the country twice as much.

According to the data analyzed in the news, in 2020 the increase in the Consumer Price Index (CPI) was 1.61 percent, which meant a 41 percent increase in prices for high-income people, while for those with lower income it was 94 percent.

In 2021, the CPI was 5.62 percent, which for high-income households meant a rise of 21.9 percent and for the most humble it was 56 percent.

In that media, they consulted with Jairo Villabona, professor of economics at the National University, who explained why this phenomenon affects the poorest households twice as much.

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

In Noticias Uno they explained that the spike in the CPI is directly related to the rise in food prices, which in January 2022 reached 19.94 percent and left an example in which a family that received 1′200,000 pesos and spent 600,000 pesos on food in January 2021, this year will have to allocate 719,640 pesos.

KEEP READING: