Colombia | Food and regulated items drove the increase in inflation in April

Summary

Inflation continued its upward trend in April, reaching 5.68% YoY, driven by food and regulated items. We expect inflation to continue increasing to 6.5% by year-end, due to climate-related shocks, the minimum wage increase, strong domestic demand, and other risks.

Key points

• Key points:
• Inflation in April came in slightly above analysts’ expectations and continued its upward trend, reaching 5.68% year-on-year, representing an increase of 12 basis points (bps) compared to March and 58 bps relative to the end of last year.
• The increase relative to March was mainly explained by food and regulated items.
• In food, this was driven by the rebound in perishables and meat, associated with the rainy season, road blockades, and stronger meat demand. In regulated items, the increase was driven by higher gasoline prices (COP 375 increase in April) and gas prices.
• Meanwhile, services inflation remained relatively stable, interrupting the upward trend observed during the first months of the year. While some components, such as residential property management services, continued exerting upward pressure, meals outside the home showed moderation. This suggests that pressures associated with the minimum wage increase remain in place, although with lower intensity in some items.
• Looking ahead, we expect inflation to continue increasing over the remainder of the year, reaching levels close to 6.5%, driven by climate-related shocks, the lingering effects of the minimum wage increase, strong domestic demand, and risks associated with the conflict in the Middle East and the El Niño phenomenon.

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