Inflation: these are the measures of the Ministry of Finance to stop it

Spread the love

In addition to delinking the rise in prices from the increase in the minimum wage, measures are also proposed for the sector and to control food prices, as well as to control the exchange rate, monitor and regulate energy prices

< /i>

Inflation: these are the measures of the Ministry of Finance to stop it

The Ministry of Finance contemplates mechanisms, through the Consumer Price Index, so that the increase in the minimum wage is not the reference point for the increase in the prices of some products, which usually occurs at the beginning of each year. Photo: Infobae Colombia Archive.

In October, inflation did not drop and the trend of rising cost of living for Colombians reached 12.22%, one of the highest in the last 20 years, registering a variation of 0.72% compared to the figures for September. Given this panorama, the Ministry of Finance announced six strategies that the national government will promote to try to put a stop to inflation.

Among the six points proposed by the Ministry of Finance, mechanisms are contemplated, through the Consumer Price Index, so that the increase in the minimum wage is not the reference point for the increase in the prices of some products, which usually occurs at the beginning of each year.

There are also sectoral measures and to control food prices, as well as to control the exchange rate, monitor and regulate energy prices as well as gradual increases in fuels so that sharp increases do not affect inflation; the last point is the announcement of a subsidy for mothers who are heads of household.

The measures

Indexation

On this point, the Government has made progress in identifying some activities, goods and services that could be de-indexed from the minimum wage, mainly in the sectors of agriculture, education, public services, transportation, housing, etc.

In this regard, Minister Ocampo announced that, as the indexing of some products has its nature either in decrees or in laws, a decree and a bill will be issued to eliminate this indexation, as appropriate in each case , as defined in the council of ministers on Monday, November 14.

“As one of the measures against inflation is that we are going to de-index all products from the minimum wage, the discussion is that there are some by decree and others by law. So we are going to issue a decree eliminating the indexing of the minimum wage to a large number of products and services. At the same time there will be a bill to de-index those that are established by law. That is a decision made by the council of ministers on Monday,” said Ocampo.

Sectoral measures and to control food prices

According to the Ministry of Finance, some measures have been implemented to mitigate the sectoral shocks that have increased food prices, such as the temporary reduction of tariffs, support for small producers to purchase of agricultural inputs, improvements in logistics chains to reduce transportation costs, and financial instruments to support the agricultural sector.

Exchange rate

Regarding the exchange rate, one of the main ghosts that has surrounded the Petro government, since the high depreciation of the local currency has affected the price levels of some goods and services. For this reason, the national government announced that unified messages will continue to be strengthened around those policies that may affect the flow of foreign currency to the Colombian economy in the near future, helping to mitigate additional upward pressures on the exchange rate.

Energy prices

Another of the challenges that the government of Gustavo Petro has had to face has to do with with energy tariffs, which have registered a sustained increase, resulting in additional price pressures in the economy. To reduce these pressures, it was announced that regulations to stabilize energy rates will be implemented as of November 2022.

Fuels

Regarding the price of fuels, the Ministry of Finance advises that to balance the tax burden As a result of the Fuel Price Stabilization Fund (FEPC) and the inflationary pressures that the increase in fuel prices could generate, the government has implemented gradual increases in the prices of gasoline and ACPM , which will avoid drastic increases in inflation. Likewise, the stabilization of the price of ACPM has been prioritized, taking into account its potential impact on the costs of transporting goods.

Additional transfers

The last point has to do with the announcement by President Gustavo Petro of the creation of a subsidy for mothers who are heads of households equivalent to $500,000 per month. This will mitigate the effect of inflation on the purchasing power of those households.