When money goes less far: a story that explains what’s happening to our wallets

Why prices remain high, how they shape everyday life, and what to expect in the months ahead.

Every week, Laura Velásquez follows the same ritual. She heads to the supermarket with her grocery list, buys the basics, and walks up to the checkout hoping for no surprises. Rice, eggs, oil, fruit, vegetables, and a bit of meat. Nothing out of the ordinary. And yet, the outcome is almost always the same. “My money doesn’t go as far as it used to. With the same products I’ve always bought, I now pay much more,” she says. That feeling, shared by thousands of households, is one of the clearest ways to understand what’s happening to people’s wallets.

The explanation lies in inflation, a concept that can sound abstract but shows up very directly in daily life. Inflation measures how much, on average, the prices of goods and services people consume increase. When it is high or unstable, it doesn’t just make life more expensive. It also makes it harder to plan basic needs like groceries, rent, utilities, transportation, or even the occasional outing, turning them into decisions that require a second thought.

In Colombia, that pressure has been evident. According to the latest data from DANE, annual inflation has been easing after the peaks seen in recent years and is now hovering around 5 percent. That represents a significant improvement from the double-digit levels that dominated the economic conversation not long ago, but it is still above the Banco de la República’s target of 3 percent. In everyday terms, prices are still rising, just at a slower pace.

For households like Laura’s, that slowdown is not always immediately felt. Prices do not fall when inflation cools; they settle at higher levels. Groceries still cost more than they once did, rents adjust each year based on the price index, and utilities continue to weigh on the monthly budget. That is why, even as the data points downward, wallets have yet to fully breathe.

The invisible impact of inflation on daily life

When prices rise steadily and unpredictably, households respond with caution. They buy only what is essential, postpone major expenses, dip into savings to cover daily needs, and live with the sense that any unexpected event could throw off the entire month. Inflation affects not only the cost of living, but also the peace of mind with which people live.

Here, a key factor emerges beyond the exact number: predictability. Facing high but stable inflation is not the same as dealing with prices that move up and down without warning. When people feel that prices are under control, even if they remain high, planning becomes possible again. Projections from the Banco de la República suggest that inflation in Colombia will continue to decline gradually in the coming months, slowly approaching the 3 percent target. For many households, that expectation of stability is almost as important as the figure itself.

Looking at other regional contexts helps explain why predictability matters so much. In Panama, for example, the picture has been different. According to official data and estimates from the International Monetary Fund, the country has recorded one of the lowest inflation rates in Latin America, close to zero in some recent periods, “having fallen year over year to -0.2 percent by the end of 2024 and to -0.7 percent in May 2025.” At the same time, it has maintained a solid economic growth outlook, with projections ranging between 4 and 5 percent of GDP.

That combination of stable prices and steady growth translates into something very concrete for people: a greater ability to plan. When the cost of groceries, transportation, or utilities does not change abruptly, families and small businesses can make decisions with less fear. It is not about everything being cheaper, but about being more predictable.

By contrast, in economies where inflation has been higher, like Colombia’s, the main challenge is not only to keep pushing prices down, but to consolidate that trend over time. Uncertainty weighs as heavily as the cost itself. How much will rent increase next year? Will groceries be more expensive next month? Is it better to save or to spend now? These questions cut across daily life and shape both big and small decisions.

For Laura Velásquez, it all comes down to something simple. “Being able to shop for groceries without feeling like every week is a race against prices. Being able to organize expenses without feeling like I can’t keep up.” If projections hold, what lies ahead is not a return to lower prices, but to more stable ones. And while that may sound like a modest change, its impact on everyday life is profound. Because when the future stops feeling like a constant threat to the wallet, people stop merely getting through each month and slowly begin to rebuild again.