Colombia’s National Administrative Department of Statistics (DANE), reported that inflation clocked in at 5.75% during 2016, a slight decrease compared to 2015, when the figure was 6.77%. Like many emerging market economies, Colombia has struggled to balance economic growth and inflation.
The lowest annual inflation occurred in the clothing sector with 3.98%. The healthcare sector, on the other hand, saw the nation’s greatest increase, at 8.14%. This was due to a rise in the prices of medicines, private insurance, supplementary payments, contraceptives, and other health items that largely increased across the board.
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Another sector that was strongly impacted was food, which increased by 7.22%, the second highest increase in Colombia. The rise in food prices was also impacted by the truck drivers’ strike that occurred in the middle of the year; truck drivers, unhappy with President Santos’ tax reform, have raised the possibility of spearheading another strike in 2017.
With regard to Colombian cities Medellín, located in the northwest of the country, registered the highest inflation during 2016, with a rise of 6.54%. Neiva, the capital of Colombia’s southwestern Huila state, registered the lowest inflation, at a mere 3.85% during the last year. In the capital, Bogota, the increase in inflation was 5.96%.
The final inflation statistics are within the range expected by the Bank of the Republic. However, many are concerned about the increase in prices in different sectors of the economy and that next year, in addition to having to pay these increases, Colombians will also be subjected to higher Value Added Tax (VAT) payments, which under President Juan Manuel Santos’ legislation, will increase from 16% to 19%.
Colombia’s political and economic sectors routinely brace for year-end positioning over wages and prices; both of which have risen dramatically in the past decade as Colombia posts impressive economic growth year over year.
Source: El Espectador