The social cost of inflation in Colombia

Abstract

Inflation affects not only the market and the economy in general, but also social aspects such as poverty and inequality; as a whole, it affects economic development and well-being. This scenario is currently present in Colombia, where inflation has had a heterogeneous impact on population groups with different incomes, especially on the most vulnerable. In this sense, the monetary policy of increasing interest rates has been the main mechanism to contain imbalances in inflation expectations, in a context of reforms, economic slowdown and a tense international environment. Thus, society, the government and the country’s institutions face the challenge of coordinating economic policies to reduce the social cost of inflation.