Colombia: Inflation breaks series record in June
July 5, 2016
In June, consumer prices rose 0.48% over the previous month, which was marginally less than the 0.51% rise registered in May. According to DANE, recreational goods observed the largest increase over the previous month, followed by the health and food components. The sharp increase in recreational goods prices are likely related to high-profile televised soccer matches in June.
Inflation climbed from 8.2% in May to 8.6% in June, the highest reading on record. Inflation is well above the Central Bank’s tolerance margin of plus/minus 1.0 percentage point around its 3.0% target. The Central Bank has been targeting high inflation with its tightening cycle that it started in September of last year. Although the Bank hinted that its last hike would be the last, June’s strong inflation figures could prompt the Bank to increase its policy rate once more in July.
The core consumer price index, which excludes volatile items such as fresh food and fuels, inched up in June to 0.62% month-on-month (May: +0.43% month-on-month). Finally, core inflation also rose from May’s 6.6% to 6.8% in June. Core inflation has followed a strong upward trend since mid-2014.
Author: Robert Hill, Economist