Colombians will pay for the most expensive fuel in history

On November 1, the price of gasoline had a new hike announced by President Gustavo Petro, bringing the value of fuel to the highest figures in the country’s history.

The price of gasoline per gallon (4.54 liters) went up COP 200 more (US$0.04), considering that the same figure had already been increased in October.

Thus, the increase has already brought the values in some cities, such as Villavicencio, the capital of the department of Meta, to COP 10,000.

In Cali, Bogotá, Manizales, and Pereira, the values are COP 9,962, COP 9,923, COP 9,916, and COP 9,907, respectively.

In December, there will be a new increase of 200 pesos, although for now, the increase does not reach diesel, which is essential for the transportation of products, whose prices will remain unchanged until mid-2023.

The Bank of the Republic, in its most recent Monetary Policy Report, valued the inflationary effect of these increases that are due to the international price of fuels and the devaluation that took the dollar for the first time above COP 5,000.

“Given the current and expected levels for the international price of fuels and the exchange rate, there is a significant gap between external prices in pesos and the domestic price, which has generated a significant deficit in the Fuel Price Stabilization Fund (FEPC),” the report recalls.

For this reason, the adjustments needed in the internal prices of regular gasoline and diesel “are of great magnitude,” says the report.

It implies a knock-on effect on transportation and product marketing costs apart from the direct impact on inflation of the gasoline price adjustment.

In addition, “the path of increases to be implemented may also affect other variables such as the country’s risk premium, the exchange rate, inflation expectations and consumption, which estimates its total impact on inflation complex and uncertain,” the report explains.

With this scenario, an annual variation of electricity inflation is expected to be close to 12% by December 2022.

With information from Sputnik

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