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Consumption continues to fall due to forced adjustment of family expenses

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Consumption continues to fall due to forced adjustment of family expenses

Due to the fact that families continued to make decisions to restrict spending, during the week of January 12 to 18, consumption registered a 6% decrease compared to the same period in 2022, discounting the inflation figure.

For the researchers, the results for January reflect a process of slowdown in consumption levels, which is in line with the trend observed since the second half of 2022. The dynamics of consumption has had a negative impact largely due to the context current economic situation, characterized by price increases, upward adjustments in interest rates and lower levels of consumer confidence, issues that generate restrictions on the ability and intention of households to purchase.

Average spending is a good measure to understand the effects of inflation, particularly in relation to a lower purchasing power on the part of households.

According to the Bancolombia report, for example, so far in January, the annual growth in nominal terms is 10%; however, in real terms the balance is negative, with a decrease of 3% compared to 2022.

The regions with the highest average ticket during the week of January 12-18 were Centro and Oriente. In contrast, the lowest record corresponds to Bogotá and Cundinamarca.



cities

During the week of January 12 to 18, the cities with the best performance were Neiva and Ibagué, with annual growth close to 4%. In second order are Santa Marta and Bucaramanga, with a behavior similar to that of 2022, with a slight growth of 1%. So far this year, 31% of cities have registered a positive balance, results in line with the slowdown in purchases observed from the second half of 2022. The slowdown in consumption has been more marked in some cities, such as Valledupar, Armenia and Pereira.

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During the week of January 12-18, the best-performing category was entertainment, with 20% year-over-year growth, which can be largely attributed to the return to business as usual of the sector’s activities, recalling that this segment was one of the most affected during the health emergency. In second order are sports, restaurants, insurance and financial services, with growth close to 16%. The pocket share for the current month presents a series of changes in participation by retail categories, department stores, supermarkets and neighborhood stores, and home and technology lose ground compared to January 2022. On the contrary, spending on entertainment and restaurants has increased its share of total purchases.

First week

As a reference for this behavior, it was known that during the week of January 5 to 11, consumption registered a decrease in real terms of 5%. These results reflect a deceleration process, derived from a complex economic context with increases in price levels and upward adjustments in interest rates, issues that considerably restrict the purchasing power of households.

On the other hand, the Business Opinion Survey for the month of December was published yesterday. According to Fedesarrollo, business confidence stood at 22.6% (+3.4%), which means a second consecutive improvement; however, the index is still 18.7% below the figure of a year ago.

Taken together, the increase in inflation, the weakening of the exchange rate and the slowdown in domestic demand could explain the decline. On the other hand, industrial confidence continues to be pessimistic, returning to negative territory at -1.2% (-12.88% in one year), after 0.1% in November; probably dragged down by the debates on the minimum wage.

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With the economy expected to slow down (from 8.2% last year to 0.6% in 2023) and amid contractive monetary policy and tighter global financial conditions, business confidence is expected to remain low. short.

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