Some Notes on December Inflation and the Expected Inflation in January in Colombia.

The latest inflation reports from the official source for the full year 2.024 show a result of 5.2%, which corresponds to a variation in December of 0.46%, a level like that of december of the previous year 2.023 when it reached 0.45%. However, when observing those two months of the two years, inflation by income levels of the Colombian population shows different behaviors in one year and the other.

In fact, for the year 2.023 in that month of december, inflation was 0.45% as mentioned before and for the poor it was 0.42% while for high incomes it was higher 0.46%. In the year 2.024, on the contrary, although inflation was 0.46% in december, like that of december 2023, that of the poor was 0.53% and that of high incomes was lower 0.39%. The explanation for the inflation of the poor being higher than that of high incomes in december 2.024 versus 2.023 is that food in that month of 2.024 presented a monthly record of 0.53% which is higher than the monthly record of that year 2.023 of -0.42 (negative behavior) and food weighs more in the purchasing power of the income of the poor than in that of high incomes, therefore the prices of the former influenced a higher inflation of the poor in december 2.024 compared to december 2.023, the month when food prices decreased.

On the other hand, the annual inflation of 5.2% recorded for the end of december 2.024 was equal to the annual inflation of the previous month, november, where it also registered 5.2%, so inflation is first showing a stagnation from one month to the next and second, the decline that it had been experiencing in previous months has stopped.

For the month of january, there are also factors that will attenuate the continuity of the decline in inflation, a decline that was observed over the course of the months of the previous year and those factors are the following: the increase in the minimum wage of 9.54% above the inflation of last year, the drought expected due to the warm weather together with the frosts typical of the month of january and the devaluation of the peso in the last months of the previous year. Considering these last mentioned factors, it is expected that in january inflation will remain the same as in december or even rise slightly and then continue its downward trend in the following months.

In january, due to the factors mentioned above, it is likely that food prices will rise first, although rent, utilities, household items, private education and restaurants will also rise. For now, gasoline prices will not rise and public transportation the increase was announced in the last quarter of last year, but in january it will take effect in the case of Bogotá. But for all these reasons, especially food prices, again as in december, inflation in january will be higher for the poor than for the high income groups.