Colombia: Inflation holds for third month at an over three-year low in January
Latest reading: Inflation came in at 5.2% in January, where it has held steady since November 2024 at the weakest rate since October 2021. Nonetheless, inflation remained entrenched above the Central Bank’s 2.0–4.0% target and outpaced market expectations. Looking at the details of the release, a faster increase in food and hospitality prices offset a softer rise in housing and transport costs.
That said, the trend pointed down, with annual average inflation falling to 6.4% in January (December: 6.6%). Meanwhile, core inflation edged down to 5.7% in January from the previous month’s 5.8%.
Lastly, consumer prices increased 0.94% over the previous month in January, up from December’s 0.46% rise. January’s figure was the highest reading since February 2024.
Outlook: Our panel expects price pressures to ease in the coming quarters, tempered by a high base effect plus lower food and oil prices; inflation is seen settling around the upper bound of the Central Bank’s 2.0–4.0% target in H2 2025. Faster-than-projected monetary policy easing, a growing hydrocarbons supply shortfall and a stronger-than-expected La Niña weather event are upside risks.
Panelist insight: Analysts at Itaú Unibanco commented:
“Given the higher-than-expected minimum wage increase and indexation pressures, the disinflationary process is set to be slow. We expect a year-end inflation of 4.2%. The slow disinflation process along with heightened global uncertainty could lead the Central Bank board to remain with a cautious stance ahead.”
BBVA’s Laura Peña Cardozo added:
“We expect inflation to moderate gradually throughout 2025. The effects of indexation, stemming from both end-2024 inflation and the increase in the minimum wage, will be more pronounced in the early months of the year, with a faster disinflationary trend expected toward the last quarter of 2025.”