Colombia: Inflation inches down to an over three-year low in March
Latest reading: Inflation ticked down to 5.1% in March from February’s 5.3%. March’s reading marked the lowest inflation rate since October 2021 and was broadly aligned with market expectations. Still, the result remained entrenched above the Central Bank’s 2.0–4.0% target. Looking at the details of the release, housing, hospitality and transport costs rose at a softer pace in March, outweighing a faster increase in food prices.
As a result, the trend pointed down slightly, with annual average inflation coming in at 6.0% in March (February: 6.1%). Meanwhile, core inflation edged down to 5.4% in March from February’s 5.6%, the joint-softest reading since March 2022.
Lastly, consumer prices rose 0.53% from the previous month in March, coming in below February’s 1.14% rise.
Outlook: Our panelists see disinflation continuing in the coming quarters as food prices on global markets ease. Still, inflation is only forecast to return to the Central Bank’s target band in Q1 2026, fanned in 2025 by a minimum wage hike and interest rate cuts. A growing hydrocarbons supply shortfall is an upside risk, while tax reforms and global tariff policy will be key to monitor.
Panelist insight: Credicorp Capital’s Daniel Velandia and Diego Camacho Alvarez commented:
“Surging volatility in the local FX market could delay in some degree (temporarily) the ongoing disinflation process. Regarding monetary policy decisions, we are of the opinion that with these numbers in the next monetary policy the odds are biased toward the reactivation of rate-cuts, with a 25-bp movement.”