According to the latest report from the Organization for Economic Cooperation and Development (OECD), Colombia is one of the countries in the world where food prices have risen the most, which explains why so many households spend the same money, but are enough for less market.
According to the agency, Colombia is the seventh country in the world where food inflation has been highest in 2023, with an increase of 26.2%.
Above Colombia are Turkey (71%), Hungary (46.9%), Lithuania (33.2%), Latvia (28.2%), Slovakia (27.5%) and Estonia (27.4%).
Undoubtedly in the country any citizen or family of the country can demonstrate the increase in the cost of living and especially food.
In the last DANE report on inflation for February 2023, the rate was 13.28%, evidencing a slight increase compared to the month of January when it stood at 13.25%.
That entity specified that this figure increased 5.27 percentage points compared to the data reported in February 2022, when it was 8.01%.
According to DANE, “the monthly behavior of the total CPI in February 2023 (1.66%) was mainly explained by the monthly variation of the Food and non-alcoholic beverages and Education divisions. The greatest variations occurred in the Education divisions (8.50%) and Furniture, articles for the home and for the ordinary maintenance of the home (2.04%)”.
The list of foods that rose the most in price in February 2023 compared to the same month last year, is headed by arracacha, yams and other tubers (103.90%), onions (75.78%) and bananas ( 48.84%). The only price decrease was reported in the potato subclass (-1.69%).
In the last month, the highest price increases were registered in the subclasses blackberries (9.88%), oranges (8.61%) and fresh fruits (7.49%). Eight subclasses fell in price, among others, cassava (-6.7%), tomato (-6.36%) and potatoes (-1.71%).
Impact
On the other hand, a report by Corficolombiana, entitled “Relief in food inflation 2023: Diagnosis and perspectives”, recognizes the strong impact of imported inputs on the historically high prices of food that were registered in 2022 and raises inflation estimated that they would have in 2023.
Although the financial entity says that in 2023 there are “upward risks” that could push food inflation, among which are unfavorable weather factors, a greater devaluation of the peso and the closure of roads for social reasons or natural disasters. , is also optimistic about what may happen.
On the one hand, the entity echoes the estimates of the World Bank, according to which the cost of the main inputs analyzed will slow down during the year.
Likewise, Corficolombiana sees internal factors that would favor lower inflation. One of them is that the La Niña phenomenon is expected to cease in March, which would benefit food production in Colombia. For the entity, another of these factors is the tax reform, which would have “an additional impact of 2% on food inflation in November and December 2023.”
The world
On the other hand, the OECD report indicates that, as a result of the improvement in business and consumer confidence, the fall in food and energy prices and the reopening of the Chinese economy, the latest prospects Provisional economic figures project global growth to reach 2.6% in 2023 and 2.9% in 2024.
Headline inflation is expected to gradually recede through 2023 in most G20 countries, from 8.1% in 2022 to 5.% in 2023 and 4.5% in 2024.
This is due to the tightening of monetary policy coming into force, declining energy prices after a mild winter in Europe and declining world food prices.
However, core inflation remains persistent, sustained by strong increases in the prices of services and cost pressures from tight labor markets. Inflationary pressures will require many central banks to keep key interest rates high well into 2024.
The international organization maintains that annual GDP growth in the United States is projected at 1.5% in 2023 and 0.9% in 2024 as monetary policy moderates demand pressures. In the euro area, growth is projected to be 0.8% in 2023, but to rise to 1.5% in 2024 as the drag on income from high energy prices eases. Growth in China is expected to recover to 5.3% this year and 4.9% in 2024.
Perspective
“The current outlook is slightly more optimistic than our previous forecasts, although the global economy remains fragile,” said OECD Secretary General Mathias Cormann. “Some key risks, such as persistent large-scale food and energy market disruptions, have been mitigated for now, however, Russia’s aggressive war against Ukraine, continued service inflation, turmoil of the financial market and the steady decline in underlying growth prospects, could be sources of further disruption. More targeted fiscal support and structural reforms to revive productivity growth will be key to optimizing the recovery and long-term growth prospects.”
The OECD notes that the improving outlook is at an early stage and that risks remain on the downside. Uncertainty about the course of the war in Ukraine and its broader consequences is a key concern. The overall impact of monetary policy changes is difficult to measure and could continue to expose financial and banking sector vulnerabilities and make it more difficult for some emerging market economies to service their debts. Pressures in global energy markets could also reappear, leading to further price spikes and further inflationary pressures.
Monetary policy should stay the course until there are clear signs that underlying inflationary pressures ease durably.
To mitigate prices
Fiscal support must be prudent and focus more on those most in need to mitigate the impact of high food and energy prices. Better targeting and a timely reduction in general support would help ensure fiscal sustainability, preserve incentives to reduce energy use, and limit additional demand stimulus at a time of high inflation.
Structural reform efforts need to be revived to revive productivity growth and ease supply constraints. Improving business dynamism, lowering barriers to cross-border trade and economic migration, and fostering flexible and inclusive labor markets would boost competition, mitigate supply shortages, and strengthen the gains from digitization.