One week after President Gustavo Petro decreed a 23% minimum wage increase for 2026—setting it at 1,750,905 pesos based on ILO 'minimum vital' standards for a three-person family—experts warn of inflation exceeding 6%, interest rates rising to 11-12%, and price hikes across sectors, potentially eroding informal workers' purchasing power.
The decree, announced December 30 amid stalled concertation talks targeting 7-16% hikes, bypassed traditional legal factors like inflation, productivity, and GDP per Law 278 of 1996. Aimed partly at boosting popularity ahead of elections, it impacts ~2.5 million formal minimum-wage jobs, 3 million up to 1.5x MW, and ~11 million lower-income workers, totaling ~8.5 million affected.
Economic projections have shifted sharply. Visión Davivienda's Andrés Langebaek upped 2026 inflation to 7.2% from 4.4%, deeming the hike 'disproportionate' and noting losses for informals. Banco de Bogotá anticipates >6% inflation, possibly 7%, from service and regulated good pressures, lifting the 9.25% policy rate to 11.25-12%. Banco de la República's 2025 caution limited cuts to 25bps.
Sectors like agriculture, manufacturing, health, and hospitality—with 1-2% margins and labor >60% of costs—face pass-through price increases exceeding 2025 inflation. Central bank hikes may follow, while agents adjust swiftly.
