Colombia

As a dollar earner spending in Colombia, you benefit from the dollar's reserve status — but local inflation still erodes what you buy. The calculator shows both sides.

CPI: World Bank (FP.CPI.TOTL.ZG). US M2: Federal Reserve FRED (M2SL). Reserve premium = cumulative M2 growth − cumulative US CPI.

Medellín became one of the most prominent expat relocation stories of the 2020s. The city's transformation, its spring-like climate, its growing food and art scene, and the favorable dollar-to-peso arithmetic made it the subject of countless conversations about geographic arbitrage. In 2019, a comfortable life in El Poblado or Laureles was achievable on $1,500 to $2,000 per month.

Then came 2021 and 2022. Colombia's peso inflation — which had been running at a manageable 3.8% in 2019 and only 1.6% in 2020 — accelerated dramatically. By 2022 it hit 13.1%, the highest rate in decades, driven by global supply chain disruption, energy costs, and domestic fiscal pressures. Prices at the mercado, restaurant menus, and apartment leases all repriced. The expat community that had arrived expecting one cost structure found another.

The peso weakened against the dollar during this period, which cushioned dollar earners somewhat. But the cushion was imperfect. Local prices rose faster than the exchange rate moved, and the reserve premium — Colombia holds dollar reserves and is heavily integrated into the dollar trade system through oil exports — meant additional compounding beyond what the CPI number captured.

By 2026, Medellín remains significantly more affordable than most US cities. The geographic arbitrage thesis is not broken — it is just more honest. The real purchasing power number, accounting for cumulative peso inflation and the reserve premium, shows that the advantage is meaningful but smaller than the 2019 baseline suggested. This calculator shows the actual gap between what the dollar is worth on paper and what it buys in practice in Colombia.