Colombia: Inflation edges up to a four-month high in February
Latest reading: Inflation inched up to 5.3% in February from January’s 5.2%. February’s figure represented the highest inflation rate since October 2024, remained entrenched above the Central Bank’s 2.0–4.0% target and outpaced market expectations. Looking at the details of the release, price growth for food, housing and utilities plus transportation accelerated in February, outweighing a softer rise in hospitality costs.
Still, the trend pointed down, with annual average inflation coming in at 6.1% in February (January: 6.4%). Meanwhile, core inflation fell to 5.6% in February from the previous month’s 5.7%.
Finally, consumer prices increased 1.14% over the previous month in February, picking up from the 0.94% rise seen in January. February’s figure was the highest reading in a year.
Outlook: Our Consensus is for price pressures to trend downward in the coming quarters, tempered by lower global food and oil costs. Still, inflation will remain above the upper bound of the Central Bank’s 2.0–4.0% target band overall in 2025 as a minimum wage hike and recent interest rate cuts filter through the real economy. Moreover, risks are tilted to the upside, and include a growing hydrocarbons supply shortfall and a stronger-than-expected La Niña weather event.
Panelist insight: BBVA’s Laura Katherine Peña Cardozo commented:
“Overall, BBVA Research expects inflation to return to a downward path in the coming months and maintain a disinflationary trend throughout 2025. Indexation effects from both end-2024 inflation and the minimum wage increase will be more pronounced in the early months of the year. However, base effects will support disinflation, particularly within the services basket.”
Analysts at Itaú Unibanco weighed in on the implications for monetary policy:
“The progress of the disinflationary process will be contained by higher indexation pressures and possible additional increases in gas prices. Therefore, we expect the Central Bank to remain cautious in its cutting cycle. While we expect the Board to resume cuts with a 25 bps adjustment to 9.25% at the next MP to take place on March 31, we cannot rule out another pause.”