Reflections on Inflation in the Coming Months Starting in August in Colombia.

According to the official source, inflation in august was 6.12%, lower than expected by the markets and registered a fall from 6.86% in july. In the result, the main components that rose were education 10.6%, restaurants and hotels 8.85% and accommodation, water and electricity with 8.73%, while the smallest variations were clothing 2.31%, furniture and household items 2.61%, information and communication -0.72% and recreation and culture 0.44%. Food registered a variation of 3.38%, health 6.34% and transportation 6.06%.

It should be noted that within the food sector there are some that have decreased in price, such as the following: wheat -16.7%, corn -18.6%, eggs -4.69%, oils -13.1%, oranges -8.5%, yucca -18.9%, tree tomatoes -7% and bananas ("plátanos") -15.3%. Among those that have increased in price are bakery products 13.6%, bananas 17.3%, blackberries 13.8%, potatoes 70%, carrots 35.3% and chocolate 56.6%.

Additionally, milk 0.44%, rice 0.1%, pasta -0.37%, bread -0.55%, meat 0.43%, chicken 1.3%, panela 5.5% and coffee -0.5%. Also rent 8.05%, electricity 15.1% and gas 7.5%. All of these last factors explain that the inflation of the inhabitants with lower monetary incomes registered an inflation of 6.01% and 6.08% for the poor and the vulnerable respectively, levels that are below the total inflation.

On the other hand, fuel for vehicles registered 14.5%, primary education 12.1%, secondary education 12.9%, higher education 7.1%, postgraduate studies 8.8%, beauty products 8.1%, women's clothing 1.21%, women's footwear 1.28%, wine 4.1% and vehicle insurance -5.5% and hotel accommodation 5.5%. All of these products, in addition to the food described above, affect the result of inflation for the income of the middle class and high incomes, which was 6.12% and 6.15% respectively, levels slightly higher than the total inflation.

From the above, the observation on the drop in inflation in august is that food, with its variation of 3.38% lower than the total, mainly influenced this variation, but was offset by the variation in rents and public services in the case of the inhabitants with lower incomes. In the case of the highest income levels, the variations in education and fuel for vehicles were the cause.

If the total inflation were measured only by food for the month of august, all of this would have dropped to 3.38%, but since there are other components that influence the Colombian population differently, such as those described above, the total inflation does not drop as much as food, but if food prices did not drop, the total inflation would not drop for the poor and vulnerable, whose income levels are affected more by food than those of the middle class and high incomes. Rents also affect low income levels more, while education affects the income of the middle class and high incomes more. Fuel for private vehicles affects high incomes more than others. Public services can also affect low-income people more. Clothing and household items, if they have low levels of price variation, favor high-income people more.

In the near future, for the next month and the following months, if food prices continue at the levels of 3.38% presented in august */ and if any of the other components also decrease, whether it is electricity or rent in the case of the poor or fuel for private vehicles or education in the case of high-income people, in that situation it is feasible that total inflation will drop from that level of 6.12% to levels below 5.5% in december, which is the estimate of experts and analysts.

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*/ The 4 day truckers' strike does not reach the point of raising prices, since if they did rise in those days, after the strike was over and transportation was normalized, those products' prices will drop due to the corresponding greater supply. The increase of only 200 pesos now in diesel and later another 200 according to analysts' estimates has minimal effect on inflation.

In food, if in september the price of products that were high in august go down, this will also push food inflation down below 3.38%, as is the case with potatoes, bananas and carrots, as mentioned above at the beginning of this note, whose prices fluctuate due to a greater supply.