Economy

We must stop double-digit inflation


The inflationary phenomenon hung over the global economy since the beginning of the second half of last year, it was a foreseeable situation that only occurs in post-war times, that is what history dictates. If you look at what happened with the variation in prices at the end of the First and Second World Wars, a hypothesis that certified that the impact of the pandemic on the global economy was of such magnitude, it was to be expected that everything would repeat itself. And the economies should have prepared themselves in advance to face such a situation that accompanied the rebound in growth. Neither the pandemic nor Russia’s attack on Ukraine are strictly black swans, in Nassin Taleb’s terms, for the simple fact that both unfortunate situations should have been foreseen by the rulers, social scholars and public policy makers; It was the obligation of the economists to foresee what was going to happen in the world, since the elements were clear there.

Now there is little room to act: the banks are in the middle of raising interest rates; Governments are lowering tariffs to meet a demand stalled by the pandemic and agricultural producers tied to crop cycles and suffocated by the high prices of all oil derivatives. The figures are alarming, in Colombia the variation in food prices during the first two months of the year is 23%, one of the highest in the last two decades, a problem that exposes the lack of effectiveness of public policies in the local agricultural sector, which has never been able to start real estate public goods at the service of agricultural productivity such as supply centers in towns, irrigation districts, community stockpiles and the still backward tertiary roads that allow supplying large cities from the field.

In other more productive and competitive countries in the agricultural sector, they are stopping exports, in order to achieve greater internal supply: that is, they do not sell meat to other countries, nor wheat, nor fertilizers, they first serve the local market. This executive order cannot be given here because in several of the products of the basic basket it is not self-sufficient and it is necessary to import, for example, the case of lentils, beans or corn. It is not about blaming the co-directors of the Banco de la República, nor questioning the role of their studies and documents prepared by the technical management or the research team, it is to alert to the politicization of all spheres productive and the non-existent transversal work between ministries, Casa de Nariño and the Issuer on the issue of inflation, which is a dense, specialized and complex issue, but it is the most important during this situation.

It is imperative to keep inflation below double digits so that people with the lowest incomes are not pushed further into poverty. The lowering of tariffs to reduce the escalation of prices was not only late, but slow in its entry into force; Inflationary control is not only about moving interest rates, we must provide the country with a more sophisticated agricultural structure, because the hard blow of increases are things as basic as meat, eggs or milk, and that is not it is about interest rates, it is risking it for the productivity of the field.

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