How inflation in 2024 would affect the cost of living in the country this year

He National Administrative Department of Statistics (Dane) announced that the Consumer Price Index (CPI) increased by 5.20% by 2025marking a new adjustment in the cost of living. This increase directly impacts the expenses of Colombian households, particularly in items such as housing, food and transportation, which represent the largest disbursements in family budgets.

One of the sectors most sensitive to the variation of the CPI is that of leases. According to DANE data, 40.3% of households in Colombia live in rent, which represents more than 21 million people. This percentage highlights the importance of the CPI increase, since lease contracts are usually adjusted annually based on this figure.

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To illustrate the impact, a person who currently pays 1,000,000 pesos in monthly rent could face an increase of $52,000, bringing their payment to 1,052,000. This variation, although expected, can generate adjustments in family budgets, especially in low- and medium-income households..

Lina Torres, Commercial Manager of Fincaraiz.com.copoints out that “During 2024, 217 million property pages were visited for rental through our platform, which shows a growing demand for rental housing. The most searched cities were Bogotá, Medellín, Cali, Bucaramanga and Barranquilla, standing out for their economic dynamism and job opportunities.”.

A 2025 full of adjustments

The increase in the CPI not only affects rental contracts. It also influences other aspects of daily life, such as updating salaries, negotiating labor contracts, and prices of basic products and services. Colombian families, especially those who live in rent, will have to adjust their budgets to adapt to this new economic scenario.

(More: Unemployment in the United States fell slightly to 4.1% in December).

As the first months of the year progress, it will be key to continue observing the behavior of prices and their impact on the domestic economy and the different productive sectors of the country.

The risks

For Grupo Bancolombia, the latest inflation data for 2024 confirms the consolidation of recent disinflation at increasingly lower levels, which is consistent with its forecast for 2025. They also highlight that core inflation measures remained on a downward path. On the other hand, They expect inflation to continue its downward path in the coming months, despite the strength that the indexation effect continues to show and the end of the favorable statistical-based effects.

However, they highlight that “some skewed risks to the upside remain in the outlook. The most relevant are: the expected climate situation (a modest La Niña effect during the end of the year and the beginning of 2025 that could affect road infrastructure), the high indexation, the devaluation, the adjustment of the minimum wage higher than the inflation of end of the year and the impacts that the international geopolitical situation has on the supply chain“. They mention that it will be key to monitor the evolution of inflation in the rental category, as well as the indirect impact of the ACPM price adjustment in December and the increase in the minimum wage.

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Inflation in the United States

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With this, Grupo Bancolombia maintains its vision that inflation will close 2025 in the high range of the Bank of the Republic’s goal (4.0%). In this context, the Board of the Bank of the Republic has been explicit about the upward risks facing the inflationary convergence process, which supported the moderation in the pace of cuts at the December meeting.

“Going forward, we anticipate that the reduction of the repo rate will be subject to the path of inflation and the materialization of the effects of the previously mentioned upward risks.“, they close.

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