The data from the National Administrative Department of Statistics (DANE) regarding inflation in Colombia for the month of July places the annual CPI at 11.78%. This figure confirms the decrease in prices that began in April, although the DANE authorities were expecting a slightly greater decrease.
Four months of decline
In a speech commemorating his first year in office on the occasion of the August 7 holiday, President Gustavo Petro stated that “Colombia has overcome inflation.” According to the data released yesterday by DANE, the downward trend that started in April of this year is confirmed, although the decrease is slightly more moderate than what the authorities were expecting.
“Our result is higher than what analysts were expecting on average,” pointed out Piedad Urdinola, Director of DANE. Expectations placed the index for the month of July at 11.64%. Nonetheless, the official figure is significant as it consolidates the downward trend after a 2022 marked by constant increases, accelerated since the beginning of the conflict in Ukraine.
Transportation continues to drive the increase
Among the sectors that continue to drive the rise in prices, transportation holds the first position. Its growth was 1.07%, well above the rest of the categories. The rise in transportation prices is primarily due to the increase in fuel prices.
Gasoline prices have risen by 47% in a year in the country as part of the government’s progressive plan to overcome the deficit in state fuel subsidies. The goal is to align the international price with the local fuel market. Following this plan, the increases have been consistent: in October 2022, an increase of 200 pesos per gallon was agreed upon. The increase was even higher in January, with a rise of 400 pesos. Finally, for now, in August 2023, the price increased by an additional 600 pesos.
“The progressive increases will end when the price of a gallon of fuel reaches between 15,000 and 16,000 pesos,” said Finance Minister Ricardo Bonilla.
The government justifies these increases with a figure: for 2022, the cost of subsidizing gasoline amounted to an expense of nearly 37 trillion pesos for the state. This is nearly double what is intended to be collected through the fiscal reform, approved in Congress at the end of last year.
Food prices, a slight relief for wallets
The rise in food prices, which was a real headache since 2021, has also been moderating. This provides some relief for citizens’ wallets. In July 2023, food prices increased by 0.22%. These figures favor lower-income households, which allocate a higher percentage of their resources to food.