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 due to the moderation in regulated prices. Despite the 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 bps compared with January, driven by the non-food basket, which stood at 5.17% due to the moderation in regulated prices.
• Regulated prices fell to 4.05%, benefiting from the COP 500 reduction in gasoline prices and a base effect in gas, although electricity recorded significant declines, mainly in Bogotá (-3.86% monthly).
• Services inflation increased to 6.45%, pressured by labor-intensive items such as meals outside the home, domestic services, and residential property management, reflecting the impact of the minimum wage increase.
• The food basket accelerated significantly to 5.84%, an increase of 73 bps compared with January, mainly explained by higher prices for perishable products such as potatoes and plantains due to the rainy season.
• Upward pressures are expected for the remainder of the year, driven by the persistence of minimum wage effects, the possible reversal of the base effect in gas tariffs, a potential depreciation of the peso, the effects of the rainy season, and uncertainty regarding international oil prices.

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