This study explores two aspects of Colombian chronic but moderate inflation experience during the period 1970-1990. Based on time series analysis, the study suggests that the policy to in­ crease relative price of energy products be comple­ mented with expenditure reducing mechanisms to avoid the validation of higher price pressures stem­ ming from other sectors. Moreover, it recom­ mends efforts to dismande indexation mechanisms, which make it difficult to reduce inflation. * Most of the empirical research for this paper was undertaken when the author was working at the Central Bank of Colombia. The author is currently advisor to the Minister of Finance of Colombia and is indebted to S. Herrera and A. Carrasquilla for comments on a first draft and to several colleagues from the IMF including M. Bonan- gelino, L. Perez, P. Neuhaus, C. Reinhart, P. Leme, and M. Zavadjil for comments which led to this version. A version of this paper was presented at thexn Latin American