Inflation and the Financial System two Current Colombian issues.

February inflation

According to recent official information, annual inflation in february was 7.74%, lower than that of january of 8.35% and lower than that of december of 9.28%. On this occasion, what was expected by analysts and think tanks was close since they estimated 7.64%.

There are subclasses or sectors that behaved above the registered inflation of 7.74% and they are mainly transportation 11.97%, education 11.66% and alcoholic beverages 11.38%. But there are also subclasses that had lower records, such as food 1.89%, recreation 4% and clothing 4.88%.

In the result mentioned before for transportation, the determining factor was gasoline with an annual variation of 43.86%. The latter, together with the low food inflation, explains the result of inflation by social class, which is 8.36% for high incomes, 7.73% for the middle class, 7.01% for the vulnerable and 6.54% for the poor.

In effect, inflation is higher for high incomes than for the poor because, as is known, the increase in gasoline was induced and controlled by public policy but obviously affected high incomes while food prices continue to decline which affects the poor less in their income.

Also when comparing with the inflation of january of the previous year, 2.023, it is observed that in that month the inflation of high incomes was 12.38%, but lower than that of the poor which was 14.34%, which is showing that in that month food inflation was still high and therefore affected the poor more due to their lower income levels and also reflects that gasoline still did not impact high incomes in that month as if it did as it did that the other months of the year passed.

Returning to the inflation of 7.74% in february, it should be noted that the Bank of the Republic with this result, although it must be cautious, can lower the interest rate in its next meeting at the end of March by a percentage greater than 25 basis points.

Finance system. Annual Results of 2023.

The profits of the financial sector reached a result in 2.023 that is one of the highest so far this century. In fact, according to the latest report from the entity in charge of supervising financial entities, these profits totaled $119 billion (b), of which $57b correspond to retirement funds, $39b to trust funds, and $8.1b to banks. Others like insurance companies $5b and securities intermediaries $4b.

For their part, the administrators of retirement funds and trust funds (such as Porvenir, Protection, etc.) $2.6b.

About the funds mentioned above, the retirement funds stand out, the growth of the moderate fund with $25b almost half of the total profits, followed by the special programmed retirement fund with $10b and later the higher risk fund and the conservative with $7.9 b and $7.3 b respectively. Here within the retirement funds, the voluntary retirement funds report profits of $3.2b lower compared to the previously mentioned funds since this is also explained by their voluntary and demand nature while the other funds are mandatory.

The trust funds, which are the second in importance, trusts stand out with $18b, followed by collective investment funds for $11b and later social security resources with $9b.

In third place in order of profits are the banks that in that particular year did not have significant results because it was a year according to analysts of low economic growth (0.6% in GDP) therefore a loan portfolio with growth equally low. The main bank in profits was Bancolombia with $6b followed by Banco de Bogotá $1b and Citibank $0.8b. There are banks with losses such as Popular -$0.4b, Scotiabank -$0.3b, Falabella -$0.2b. and Pichincha -$0.1b.

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Today (friday 8) as for world markets, stock markets are growing moderately awaiting employment data in the United States today and the possible downward movement in interest rates by central banks towards the month of june.

The price of oil falls due to inventory levels in the United States and the perspective on interest rates. WTI is trading at $78.47 per barrel.

In Colombia, the peso opens the day with appreciation and is trading at 3.903 per dollar compared to a TRM for today of 3.920.8.