Colombia: Inflation remains stable in May
Inflation was stable at April’s 7.2% in May, marking a pause in Colombia’s 13-month-long disinflation trend. May’s reading marked the joint-weakest inflation rate since January 2022 and had been priced in by markets. Looking at the details of the release, faster price pressures for food and non-alcoholic beverages offset softer price growth for transport plus housing and utilities.
Meanwhile, annual average inflation fell to 9.4% in May (April: 9.9%), and core inflation edged down to 7.2% in May, from the previous month’s 7.3%.
Finally, consumer prices rose 0.42% in May over the previous month, coming in below the 0.59% rise logged in April. May’s result marked the weakest reading since October 2023.
Our Consensus is for inflation to resume its downward path and decline on average from current levels through Q4 2025. Moreover, our panelists see price pressures averaging lower this year than last. That said, price growth will continue to outpace the Central Bank’s target range of 2.0–4.0% over 2024 as a whole. Disinflation will likely slow once the impact of interest rate cuts fully trickles down into the real economy.
Daniel Velandia and Diego Camacho Alvarez, analysts at Credicorp Capital, commented:
“We maintain our forecast for inflation to end the year at 5.5%. The latest BanRep Board minutes clearly reiterated that inside the Board, there is already a consensus about the convenience of extending the ongoing rate cut cycle, but with discrepancies about the magnitude of the cuts. Most members continue opposing aggressive monetary policy easing due to concerns on the fiscal front as well as the uncertainty related to high-level government pronouncements on political, economic, and social issues. Overall, we are increasing our repo rate forecast from 8% to 8.50% for year-end.”
BBVA Research’s Alejandro Reyes González added:
“We expect food inflation to continue to accelerate in June and maintain high levels in the third quarter; however, we believe that the effect will be transitory and will not affect inflation at the end of the year. On the contrary, we believe that non-food inflation will continue to show relief, which will shift from goods to services as the year progresses, although still with high uncertainty from regulated goods and persistence in some services such as rents.”