Published on Friday, May 6, 2022

Colombia | Inflation hits two-decade high in April at 9.23%

Inflation in April was 1.25% on a monthly basis and 9.23% on an annual basis, making it the highest in the last two decades. Market analysts were surprised by the result, which was not only above the estimated average, but also above the maximum of the range of expectations recorded in the BanRep survey.

Key points

  • Key points:
  • The inflationary surprise in April was twofold: food inflation was 48 bps above the expected average (2.75% monthly) and core inflation 38 bps above the market estimate (0.90%).
  • In the food and non-alcoholic beverages division, annual inflation reached 26.2%, with goods such as perishables reaching an inflation rate of 39.9% y/y, while the processed food basket rose to 16.6% and meat to 25.33%.
  • The clothing and footwear and restaurants and hotels divisions also weighed in the high April result, with annual inflation of 4.7% and 14.3% respectively.
  • Within core inflation, tradable goods took the lead showing the highest acceleration, with an annual change of 7.9% (148 bps above the previous month). On the other hand, regulated products showed a lower acceleration reaching 8.9% y/y on par with non-tradables with an annual register of 2%.
  • The high inflationary result could impact again the expectations of economic agents, thus increasing the risks of their de-anchoring. This will surely play an important role in the Banco de la República's assessment in its next meetings, ratifying the need to continue adjusting rates upwards but increasing the discussion on the appropriate size of the adjustment and the final rate of the upward cycle.

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