Colombia: Inflation remains steady in June
Inflation was stable at 7.2% for the second consecutive month in June. June’s reading marked the joint-weakest inflation rate since January 2022 and had been largely priced in by markets. That said, the result remained firmly above the Central Bank’s 2.0–4.0% target range. Looking at the details of the release, slower price growth for transportation was offset by faster price pressures for food and non-alcoholic beverages plus housing and utilities.
Meanwhile, the trend pointed down, with annual average inflation falling to 9.0% in June (May: 9.4%). Moreover, core inflation edged down to 7.1% in June from the previous month’s 7.2%.
Finally, consumer prices rose 0.32% over the previous month in June, below May’s 0.42% rise. June’s result marked the weakest reading since October 2023.
Our Consensus is for the downward trend in inflation to resume in the third quarter. That said, the disinflation process is expected to remain sluggish amid monetary policy easing and a fading high base of comparison; price pressures are seen outpacing the official target range until H2 2025.
Analysts at Itaú Unibanco commented:
“June’s print confirms the gradual nature of the disinflation path back to BanRep’s 3% target, which put together with above target inflation expectations, limit the Board from accelerating the pace of rate cuts in the near term. Our preliminary estimate for July’s CPI [is] annual inflation falling to 6.9%. Risks to our 5.2% year-end inflation call are tilted to the upside, amid sticky services inflation and the effects of recent COP weakness. We estimate BanRep to continue with the cautious 50 bp rate cut pace at the July 31 monetary policy meeting.”
Scotiabank Colpatria analysts added:
“In July, we expect headline inflation to resume its downward trend as negative statistical bases on food will be surpassed, which could lead headline annual figure to break down the 7% level, while by the end of the year, we expect inflation to close around 5.6%. Today’s inflation supports the scenario for a cautious BanRep. For the July 31st meeting, we expect a 50 bps rate cut to 10.75%.”