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They forecast higher inflation in January due to the rise in food prices

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They forecast higher inflation in January due to the rise in food prices

The increase in the minimum wage, the cost of food, the increase in the price of gasoline and high interest rates will continue to take their toll on Colombians’ pockets in January.

This is the perception of the markets, which estimate that at least in the first exchange of this year, inflation will continue the escalation that it showed in the last six months, especially taking into account the impact that the closing of the Pan-American Highway.

According to preliminary evaluations, Bancolombia experts point out in an analysis that “we estimate that monthly inflation would once again register a high value in January. Indeed, after the December result, in January we expect a new increase in monthly inflation, driven by the incidence of the food basket, resulting in an adjustment of expectations that now sees the inflationary peak later than we anticipated and than most analysts previously considered.

The experts point out that “from the food component, a monthly variation of 2.66% would be due to the reversal of the downward trend of perishables and the acceleration of processed foods, especially meats and grains, due to a greater Demand at year-end festivities. On the regulated side, the government started the year with an increase of $400 for gasoline and $57 for diesel, such that it would push the basket up.”


The analysts indicated that, “in addition, we anticipate that the 16% increase in the minimum wage will exacerbate the functioning of the indexation mechanisms in a significant number of goods and services. We also anticipate an additional transfer of the exchange rate to the prices of imported goods, an acceleration of rentals based on the inflation observed in December and the reversal of relief in indirect taxes, such as full VAT on hotels, tourism and air tickets, the lack of consumption of meals outside the home, among others. The aforementioned is consistent with a monthly inflation outlook for January of 1.85%”.

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This data is in line with what was found in the first survey of this year by the Banco de la República carried out among financial analysts, in which they estimate inflation in January of 1.61%.

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According to the result, analysts consider that this year inflation will close at 8.63%. This data contrasts with the average figure that they had given last December, when they considered that the indicator in 2023 would close at 7.74%.

This increase, according to analysts, was influenced by the figure of 13.12% with which inflation closed in 2022, data that no expert, study center or academic had projected and which put the economic and monetary authorities on alert.

The survey showed that, for 2024, the projection regarding the increase in the inflation indicator is 5.05%.


Regarding expectations in terms of inflation without food, the estimates for all of 2023 by those consulted were 7.97%.

However, these forecasts contrast with those just released by Fedesarrollo, in which analysts consider that inflation will be located at 13.36% (in a range between 13.03% and 13.66%) in January with a monthly increase of 0.36%.

For this edition, those consulted foresee that at the end of the year inflation will close at 8.89% (in a range between 8.50% and 9.96%), evidencing an increase of 1.25% in expectations compared to the month previous (7.64%), therefore the inflation outlook remains outside the target range of the Banco de la República (2.0% – 4.0%).

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On the other hand, the experts pointed out to Bancolombia, in relation to the interest rate, that “we expect the Banco de la República to increase the monetary policy interest rate by another 100 basis points at the January meeting.”

“Given the upward surprise in the inflation results at the end of 2022, where the annual variation reached 13.12% -the maximum record so far in the 21st century-, added to the impact of the closure of the Pan-American highway on the prices of food due to the interruption of supply to the rest of the country. Although the economy has been showing signs of weakening, we anticipate that the last increase of the cycle will take place in March, after which it is foreseeable that the stability in the rate levels will be the characteristic factor of the following quarters”, the analysts maintain. .

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