Colombia’s inflation started to fall: it reached a 12.82% annual rate in April

By Valerie Cifuentes*

After 22 months, with an upward trend, as expected by the market, inflation in Colombia began to fall in April.

During the fourth month of the year, the indicator was 12.82% annualized, lower than the historical figure reported in March (13.34%), according to Dane (Colombian National Statistics Department).

Regarding monthly inflation, the statistical entity reported that it was 0.78%.

Utilities, transportation, restaurants, and hotels were the three items that contributed the most to April’s monthly inflation.

They contributed 0.63 points to the total variation (0.78%), representing 80% of the total reported.

In annual terms, the items in which inflation grew the most were restaurants and hotels (18.60%), food and beverages (18.47%), and transportation (16.75%).

However, the three items that contributed the most to annual inflation in April were: food, utilities, and transportation.

These spending divisions accounted for 63% of the total variation.

A statistical base effect is among the reasons for the expected decline in inflation in April of this year.

A year ago, one of the items in which prices grew the most month after month was food, but currently, this has moderated, pushing inflation downwards.

Although the Central Bank will not decide on interest rates in May, “this result will help the inflation expectations of the consensus and the market.”

“Food will continue to be the key factor in the correction, so the downward trend in inflation will continue in May.”

“This points to the fact that the rate ceiling has also been reached”, highlighted Gustavo Acero, senior analyst at Banco de Bogotá.

For the months ahead, if the dry season expected from the second half of the year is not too strong and if the dollar continues its downward trend, inflation will continue to fall in Colombia after several historical highs reached until March.

By the end of the year, the market consensus is expecting Colombia’s inflation to end above 9%, which, although still high, would be lower than in 2022 (13.12%).

*a journalist specializing in economics, finance, and business topics., was co-editor of economics and finance for Forbes Colombia and journalist for El Tiempo’s Portafolio newspaper, La República newspaper, and the communications office of the Banking and Financial Institutions Association of Colombia (Asobancaria).

With information from Bloomberg