Colombia | Inflation continues to accelerate in May to 5.84%

Summary

Inflation in May came in line with BBVA Research expectations and continued its upward trend, reaching 5.84% year-on-year, representing an increase of 16 basis points (bps) compared to April and 74 bps relative to the end of last year.

Key points

• Key points:
• The increase relative to April was mainly explained by regulated items and services.
• In regulated items, the increase was driven by higher gasoline prices (COP 400 increase in May), electricity tariffs, and water prices.
• In services, the increase was driven by airfares, package holidays, and rents. In the case of the first two components, this behavior may be associated with the approaching holiday season.
• Meanwhile, rent inflation reversed the deceleration trend observed during the first months of the year and increased to 4.89% year-on-year (+9 bps compared to the previous month) in May. This behavior may be reflecting demand pressures in a context of limited housing supply. However, it is still too early to determine whether rents will begin an upward trend or whether what was observed in May corresponds to a temporary phenomenon.
• Looking ahead, we expect inflation to continue increasing over the remainder of the year, reaching levels close to 7.0%, driven by the lingering effects of the minimum wage increase, strong domestic demand, the imminent occurrence of an El Niño phenomenon during the second half of the year, and risks associated with the conflict in the Middle East.

Geographies

Topics

Tags