Macroeconomic indicators are essential tools to be able to plan financial strategies, budgets and projects of our companies for 2024, this is why we must have an idea of ​​the projection of these indicators, which are key because they provide information about the current state of the economy and offer a basis for predicting your future. 

In this article we will review inflation , it is an indicator that gives us a vision for decision making, this is because it measures the rate at which the prices of goods and services are increasing. The Bank of the Republic (BanRep) as an autonomous entity has the authority to apply monetary policies in favor of the economic growth of the country. 

Why should inflation be taken into account? 

Inflation should be integrated into the financial planning of budgets and projects for the following reasons: 

• Income: Helps set realistic goals and evaluate financial viability over time. 
• Costs: It is possible to ensure that estimated costs reflect the most accurate and real future prices. 
• Purchasing power: The objective is to protect the real value of resources. 
• Financing: Inflation can have an impact on interest rates, providing tools for decision-making on project financing. 
• Reduction of risks: Enables better preparation for possible changes in costs. 

In the latest monetary policy report from the Bank of the Republic, an increase in the inflation rate was announced. This is explained in the short term by the increase in some perishable products due to anticipation of the agricultural cycle, as well as in the medium term by the effects of the El Niño phenomenon, which are estimated to be transitory and moderate. Additionally, it is due to different factors that favor the decreasing trend explained by reductions in international prices, low exchange rate pressures (inputs and processed foods) and the dilution of the effects of the aforementioned natural climate phenomenon. 

From the above, and after the deceleration of inflation in Q3 was slower than projected, the Bank of the Republic reported that total inflation would continue its decline and would end 2023 at 9.8% (previously 9.0% ) and 2024 at 4% (previously 3.5%). 

Finally, these changes presented in the latest BanRep report give us a more precise vision and guide to know how much to place the inflation rate in our budgets and projects. Integrating inflation is essential to guarantee realistic financial planning adjusted to the conditions. economic variables that vary over time. 

Reference: Monetary Policy Report – October 2023 – Bank of the Republic.