What is the inflation target in Colombia? When was it set at that level, and how does it compare with other countries?
Colombia’s inflation target is 3.0%. It has been set at this level since 2009 and it is the same in countries such as Chile, Mexico, Brazil, Costa Rica, China, Hungary, the Philippines, and Georgia. It is also very close to the targets of Australia, Indonesia, Iceland, Malaysia, Poland, and Romania, which set it at 2.5%, as well as India, Paraguay, and Russia, at 4.0%.
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The Inflation Target and its Importance for Price Stability
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Inflation is the generalized and sustained increase in the prices of goods and services. When inflation is high, money loses its value rapidly, which affects all sectors of the economy, especially households, as their purchasing power declines. This means that with the same amount of money, a household can buy fewer basic goods such as food, and access fewer services such as transportation and rent. Additionally, when inflation is not only high but also volatile, it hinders the financing of long-term projects that require a significant investment of resources such as education, entrepreneurship, and home purchases....
