Colombia | Inflation halted its acceleration in February, standing at 5.29%

Summary

Annual inflation in Colombia stood at 5.29% in February, registering a slight decline explained by the moderation in regulated prices. Despite this downside surprise, pressures persist in food, goods, and labor-intensive services, affected by the increase in the minimum wage.

Key points

• Key points:
• Total annual inflation declined to 5.29%, a reduction of 6 bp compared to January, driven by the non-food basket, which stood at 5.17% (-24 bp compared to January), due to the moderation in regulated prices.
• Regulated prices fell to 4.05% year-on-year (-143 bp), supported by the COP 500 reduction in gasoline and a base effect in gas. Electricity also showed significant declines, mainly in Bogotá, with a monthly variation of -3.86%.
• Services inflation increased to 6.45% year-on-year (+12 bp), pressured by labor-intensive items such as food away from home and domestic services, reflecting the impact of the minimum wage increase. Meanwhile, goods inflation also increased to 3.03% year-on-year (+12 bp).
• The food basket accelerated to 5.84% year-on-year (+73 bp compared to January), mainly driven by higher prices of perishable foods such as potatoes and plantains due to the rainy season.
• Inflation is expected to increase over the remainder of the year due to the persistence of minimum wage effects, the reversal of the base effect in gas tariffs, a possible depreciation of the peso, and the effects of the rainy season.

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