Hard Times: Price Increases to Expect in Colombia for 2023
Economy News

Hard Times: Price Increases to Expect in Colombia for 2023

However optimistic you might be as a person, it’s clear to see that 2023 will be a year with its fair share of challenges for the average Colombian. We can expect to see increases in the price of products and services and across the board that are bound to leave an impact on our budgets. According to the National Administrative Department of Statistics, the inflation rate as of November 2022 stood at 12.53%. The effects of high inflation, as we are all aware, trickle down into every transaction made on a day-to-day basis by each Colombian household.

The price of gasoline, for example, has seen an increase of 400 pesos per gallon for petrol and a 57 peso increase for diesel fuel. This has been in effect since January 1, 2023, and  the Ministry of Finance attributes it to the usual updates and legislative actions that take place every first month of the year. Authorities hope that with this increase, the National Government can help ease the impact of the fluctuations occurring in international markets of refined oil. This action is being taken through the agency of the Fuel Stabilization Fund, which was designed to buffer the country against such external shocks.

The airline industry has not been spared the impact of tough economic times around the world, and Colombian passengers are set to feel the pinch as a result. Airlines have been once again directed to charge a 19% VAT on all tickets sold after the rate had been slashed to 5% at the height of the Covid-19 Pandemic. Guillermo Francisco Reyez Gonzalez, the Minister of Transport, promises to negotiate terms with the government that would lower this rate to 14%, thus minimizing the impact on passengers.

You won’t be spared if you’re traveling on the ground, either. Starting January 16, all toll station rates were increased by 30%. Because a large percentage of Colombian cargo is delivered by road and rail, we can expect this increase to reflect on the prices we pay for our local purchases. 

This initiative will be carried out under the purview of the National Institute of Roads. People taking public transportation will also see a 12.5% increase in their fares, a decision that was taken after considering the Consumer Price Index and inflationary pressure. 

Imported clothing items will also see a considerable price increase. A decree was sanctioned on December 23, 2022 that declared a 40% tariff on certain types of imported clothing items including jackets, coats, capes, wool pants, suits, and synthetic, cotton, or artificial fibers. This levy, however, will not apply to countries that Colombia has active trade agreements with.

If you regularly use a credit card to make your purchases, you should also brace yourself for increased costs in 2023. The Ministry of Finance announced that the interest rate on credit card debt will be bumped up in the coming year.

Finally, the Directorate of National Taxes and Customs stated that in 2023, restaurants and eating establishments that operated under the Simple Taxation Regime (RST) of previous years will be required to charge consumption tax this year. Consumption tax is a tax levied on the final purchase of a product. In the bar and restaurant industries, this tax is set at 8%. Whoever you are, and wherever you live in Colombia, 2023 seems set to be a year of belt-tightening. We’re all hoping for the best. 

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