Colombia | August inflation at 5.1%, second consecutive increase

Summary

Monthly inflation in August was 0.19%, in line with analysts' expectations and BBVA Research. This brings annual inflation to 5.1%, an increase of 20 basis points compared to July, and marks two consecutive months of inflation increases.

Key points

• Key points:
• The acceleration in inflation in August was mainly explained by the behavior of food prices, with a monthly variation of 0.45% and an annual variation of 6.13% (+119bp compared to the previous month). This was driven especially by perishable goods.
• Core inflation, excluding food, saw a slight reduction in its annual variation, standing at 4.9% (-3bp compared to July). In August, this result was mainly explained by the behavior of regulated items, although a slight moderation was also observed in services. The basket of goods excluding food and regulated items showed a slight increase of 3bp in August, standing at 4.8% in its annual variation.
• Regulated prices showed annual inflation of 5.0% in August (-24bp compared to July). This moderation in inflation was mainly explained by the behavior of gas and tolls, both with base effects. Services, meanwhile, showed a slight reduction in annual variation and stood at 59% (-7bp). This result was mainly supported by a significant moderation in annual rental inflation (-26bp compared to July) with a monthly variation very close to the average for August.
• The August inflation result reinforces the cautious stance recently taken by the Board of the Central Bank, not only because of the increase in total inflation, which is once again above 5.0%, but especially because of the persistence of core inflation and evidence of some specific demand pressures that may complicate the task of reducing inflation going forward.

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