Inflation hit record high in Colombia: what do economists say?

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Inflation and the devaluation of the peso continue to worry the Colombian population. For one thing, the national currency has devalued 24 percent against the dollar in recent months, while annual inflation stood at 12.53 percent in November, marking the highest level in 23 years.

Colombia’s National Administrative Department of Statistics (DANE). revealed this week that November inflation reached an all-time highThe last time such a high rate was recorded was in March 1999.

Some Colombians warn that the South American country is the sixth of the 38 members of the Organization for Economic Cooperation and Development (OECD) with the highest rate of food inflation. Therefore, the high cost of basic necessities is leaving millions of people hungry.not only in Colombia, but also throughout Latin America.

A report recently submitted to the United Nations, states that “the number of people in the region suffering from hunger has increased by 13.2 million to 56.5 million.” According to the document, the increase in inflation breeds extreme poverty and consequently increases food insecurity and hunger.

How can Colombia’s historical inflation be explained?

When asked about the high cost of living in Colombia, some Colombian economists point out that inflation is not generated by increased monetary issuance supported by the government since 2017. On the contrary, they believe that so-called money printing is necessary to grow the economy.

In this sense, Colombian economist José Manuel Restrepo explained that a growing country needs to increase monetary issuance as its economy grows. “Colombia has had the fastest growth in the OECD,” he wrote, even though agency data show that the country is actually among those with the highest food inflation.

Economist Hernando Zuleta also. sees inflation as normal “and long-lasting, as the money supply reacts counter-cyclically in the economy.” For him, when the economy is stagnant and GDP is not growing at optimal rates, “it is normal for the money supply and money supply to grow.”

On this subject, comments Colombian bitcoiner Mauricio Toro on Twitter who, based on data provided by the government, warns that the increase in monetary issuance (72%) maintained from 2017 to 2021 has not led to growth in the economy.

During that period, the country’s Gross Domestic Product increased by only 22 percent, that is, it was not proportional to the production of money, which is behind the historic rate of inflation that affects the Colombian economy today.

In light of this, Tovar calls on the country’s economists and Banco República, the issuer of the Colombian peso, to take responsibility and be transparent. This is because inflation impoverishes the population and, as a result, the Monetary issuance is nothing more than a factory of the poor.

On the other hand, the havoc caused by the devaluation of various currencies, such as the one suffered by the Colombian peso, can be measured if we take bitcoin (BTC) as a comparison. A look at the price of bitcoin in 2017 can make it clear how investing in bitcoin at the time might have been better than doing so today, as can be seen in the following example reports CryptoNews in October.