War in Ukraine would have an effect on food inflation in Colombia

The cost of food is a matter that is strongly touching the pockets of Colombians, the recent survey revealed by Dane showed a -1.5% decrease in food sales. According to the director of Fedesarrollo, Luis Mejía, in a dialogue with Caracol Radio: “Inflation has been rising since the middle of last year, closing in February with a figure of 23.3%. Naturally, with such a high inflation figure, what households do is reduce food purchases.”

Regarding this situation, some analysts showed an improvement in prices for the month of May, but according to indications of the head of the Bank of the Republic Leonardo Villar, the ongoing conflict in Ukraine would influence inflation to continue in the national territory.

“There is fear that because of Colombia's food and agricultural imports, food prices will not begin to fall in May, but that uncertainty will be added to the correction of prices,” said the Bank's manager in a discussion by Center for Global Development.

An example of this is the rise that oil is experiencing in the national territory. The rising costs of wheat, sunflower and corn are affecting many people globally in their economy. According to the Food and Agriculture Organization of the United Nations, FAO, it had indicated that some 38 million people in the world would be affected in June, should prices of these products continue to rise.

The crisis worsens with the passing of days as the conflict between Russia and Ukraine unfolds, so that globally prices are impacted on various products and inputs for the same processing, one of which is oil, both vegetable and sunflower, whose price has increased by almost 23% in the past alone month of March.

According to figures provided by the National Administrative Department of Statistics, DANE, inflation in March reached 8.53%, a figure that has not been seen since 2016; but, specifically speaking of oil, this product and its high price have generated increases in others, even the popular trend has been affected by this. Nationally, inflation in the price of oil in March was 45.13%, but, for example, in Barranquilla, there was an increase of 51.72%.

All these factors, together with the shortage in the oilseeds market at the international level, have led to such increases. In the case of Colombia, sunflower oil is the one that has been most affected, this has led to vegetable, palm and soy oils increasing their market share.

These “alternatives” have shown that other types of products can be sought, which do not impact the pocket of Colombians as much, according to the National Federation of Palm Oil Growers of Colombia, Fedepalma, palm oil production increased by 12.7% in March, in total, 196,200 tons were delivered.

Products such as sweets, sauces such as industrial mayonnaise, tomato, pesto, Bolognese or Neapolitan; also, snacks such as potato chips, bananas, donuts, nuts, among many others will be affected by these increases.

Despite all this, for the time being, oil prices do not seem to be going down any time soon, in fact, for several products, for example, DANE published a “corrientazo index”, where you can see how the price of lunch has been affected in the main cities of Colombia.

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