In April, inflation in Colombia was 12.82 percent, compared to the 13.34 registered in March. It was the first in eleven months that the increases accumulated in a year did not increase more.
(Also read: Inflation subsides in April, but there are still risks due to possible increases)
Two days after that result was known, President Gustavo Petro affirmed this Sunday in Portugal that Colombia was marking a contrast to the rest of the world because while inflation was overflowing on the planet, Colombia was enjoying «negative inflation» in food. The solid disclosure was in a trill on the Twitter account of the Presidency and, immediately, ten ten comments. Then the trill was erased.
The message had two components: the first, in which Petro affirms that the situation in Colombia in terms of food prices is more favorable than that experienced by the rest of the planet. The second part of the trill content corresponds to when a country is claimed to experience “negative inflation”.
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Is there a better situation in the country than in the world in terms of food prices?
President Petro limited himself to affirming that Colombia, contrary to the world, has a better situation in terms of food prices, but did not mention examples. The increases in Colombia in this area are 18.5 percent. If you look at the most similar countries, only in the region, these are the annual increases: Chile, 17.4 percent; Peru, 12.1; Mexico 11.01; Brazil,7.3.
What is happening globally? According to the Food and Agriculture Organization of the United Nations (FAO), its food price index has been falling for a year, and it has done so by 19.7 percent, a figure similar to that of Colombia, but downwards. , not up. The global meat price index has fallen 9.1 percent in 10 months; that of dairy products has fallen 17 percent also in 10 months; that of cereals falls 21.6 percent in eleven months; that of vegetable oils is reduced 45.3 percent in one year, and it is where there is a greater fall in prices. Sugar is the only one that rises, with 37.6 percent in six months.
What does Petro mean by ‘negative inflation’?
In the full year ending in April, inflation, according to Dane, was 12.82 percent; that of the current year (four months), 5.38 percent, and only the increases in April were 0.78 percent. This monthly rate is equivalent to an annual rate of 9.8 percent, meaning that if this rate were maintained, the increases would continue as the highest in 23 years.
Petro was talking about food increases, but only in April, which according to the official statistical entity had prices overall 0.07 percent lower than those of a month ago, that is, a purchase of 250,000 pesos goes to 249,825 pesos , showing that the fight against hunger pays off, according to Petro.
Is there such a thing as ‘negative inflation’?
So a term like ‘negative inflation’ would mean that over periods of several months prices would be falling. Actually, the discipline of Economics does not speak of ‘negative inflation’ and Petro may have meant deflation.
What is deflation?
Similar to inflation, deflation is the constant fall in prices, for several months, in the cost of the consumer basket. AND there are countries, like Japan, where this phenomenon is more common than people can imagine.
Is there deflation in Colombia?
No. According to the information published by Dane on Friday of the previous week, Colombia has an annual inflation of 12.82 percent, which places the country in the group of countries in the world with the highest rate of increases in the family basket. .
Has there been deflation in Colombia in the past?
The last time in a month that prices as a whole fell was in June 2021, a drop of 0.05 percent. But it was only a month, therefore one cannot speak of a trend of price reduction or deflation.
You have to go back 68 years to find full-year periods with a decrease in the cost of the family basket. In the 12 months ended in July 1955, prices fell 0.87 percent, and in the 12 months ended in August of that year, there was an annual reduction of 0.01 percent.
Does Colombia have a better inflation phenomenon than the whole world?
In the first place, the annual inflation of April, of 12.82 annual percent, continues to be, with that of the previous 7 months, among the highest in the last 24 years. Those levels have not been seen since March 1999.
If you look at Europe, among 45 countries, only 14 exceed the inflation of Colombia; in seven countries of Oceania, none has an inflation higher than that of Colombia; In a list of 32 African countries, there are 14 that are more expensive than Colombia; Among 46 Asian countries, there are only 10 that exceed the rate of growth of the country.
Is inflation in Colombia more favorable than that of the continent?
Among 33 countries in the Americas, there are only 5 that have higher increases than those of Colombia. These countries are Cuba (44.5%), Haiti (48.2%), Suriname (59.4%), Argentina (104%) and Venezuela (156%).
finally, The argument that inflation is negative can be interpreted as actually being ‘negative’ because it erodes the purchasing power of workers and their households. And when it accelerates as it has done in the country, it ends up hitting consumption, therefore company sales, their investment plans and, consequently, jeopardizing employment.