At the end of the second quarter of the year, Colombian household spending totaled nearly $287 billion, representing about 76.1% of the country’s economy. The Bancolombia Research Group estimated that with this result, household consumption was 12.6% higher than the same period last year and, taking into account the impact of annual inflation, recorded real growth of 0.7%.
“In this way, the impact of the price increase on household purchasing power and therefore on consumption dynamics becomes clear,” said Laura Clavijo, director of economic research at Bancolombia.
The bank’s analysts emphasize that, without taking the lockdown periods into account, this is the lowest consumption growth since 2006.
“The track record so far this year shows a shift in household consumption habits, moving towards goods and services linked to experiences outside the home and short-term purchases, rather than long-term purchases. “This is supported by behavior in categories such as leisure and culture and alcoholic beverages, which maintain a growing trend.” The report highlights.
The durable goods segment includes automobiles, home appliances and furniture, which require significant initial investment and provide long-term benefits. was the most affected during the analysis period, with a decrease of 13.9% compared to the second quarter of 2022.
Bancolombia’s research indicates that investments in durable goods go through three periods of negative fluctuations. The report explains this situation using the volatility of the exchange rate. a variable that, in addition to the slowdown in household debt caused by interest rates, also influences the prices of this type of goods.
The consumer landscape
Given the economic forecasts of the bank’s research group that expect inflation to reach 9% at the end of the year and 5.3% in 2024, and its expectation that 2023 will end with interest rates near 12.5% and figures of around 8 .5% next year, the report suggests there will be a long-term recovery in spending.
“By the end of 2023, we expect household consumption to weaken with slight growth of 0.2%. “The level is very similar to what we forecast for 2024. In subsequent years, we expect stronger growth in line with a positive macroeconomic environment,” the document said.
