Colombian CPI Drops Again in November

November CPI data from the National Administrative Department of Statistics (DANE) was down again — and marginally lower than expected. The monthly number (0.47%) was higher than October’s 0.25%, but ot still led us to a 12-month number of 10.15% (compared to an October figure 10.48%).

Housing (+1.05%) was the biggest contributor (with 68% of the monthly total), and this was driven by a 5.89% increase in energy prices. El Niño is here, and we see the highest energy price increases in the hottest areas of Colombia, including Santa Marta, Barranquilla, and Riohacha.

There had been a lot of concern about the “Sugar-Fat-Junk Food” tax, which was imposed at the outset of the month as the government of President Gustavo Petro  finally raised taxes on unhealthy products. But food inflation actually dropped 0.45% month-over-month versus an expectation of a 0.21% increase.

Meanwhile, transport was up 0.72% and did contribute but that was after a 4% increase in gasoline prices. We should be close to the end of that cycle as the government correctly reverses over a decade of fuel subsidies.

The other area with a significant increase was restaurants (+0.83%). For an economy that is “struggling” the propensity to eat out or order in for a Netflix evening is still there.

This inflation number will now be up for debate in two places. Firstly, the Banco de la República who now surely have to cut rates by at least 25bps in a couple of weeks time – and then the Minimum Wage Commission who next week will have to come up with a number next week – 10%+ seems a certainty.

Earlier this week I ran through the other main news, but in brief:

The health reform has passed through Congress with a couple more articles removed. From January the Senate and the Supreme Court will have their say – expect yet more adjustments amidst an atmosphere of excitement and trepidation.

October exports fell 1.5% year-over-year, much better than the double digit declines we have seen throughout 2023 however OIL (+28.5%) alone basically accounted for the whole increase. Elsewhere, benign numbers.

Colombia’s current account deficit or Q3 dropped for the fourth consecutive quarter to -1.7%, despite fears over the Petro administration’s discipline, the lowest reading since Q2 2009.

The Ministry of Transportation and Fedetranscarga remain on a heavyweight collision course over fuel prices in 2024. The government has already stated its aim to raise diesel prices — having not touched them in 2023 — but it is going to be a rocky road. The government is discussing moving large companies only to international prices whilst the transport companies are saying that an 80% increase is coming. This will be a fascinating watch.

Never miss Rupert’s latest commentary
Follow him now on LinkedIn to see What Jumps Out