Colombia: Inflation falls in May to lowest rate since October 2022
Inflation came in at 12.4% in May, which was down from April’s 12.8% and below market expectations. May’s figure represented the lowest inflation rate since October 2022. The result was driven by moderating price pressures for food and non-alcoholic beverages and restaurants and hotels.
The trend pointed up, with annual average inflation coming in at 12.1% in May (April: 11.8%). Meanwhile, core inflation fell to 11.9% in May from April’s 12.2%.
Lastly, consumer prices increased 0.44% in May over the previous month, moderating from the 0.78% increase logged in April. May’s result marked the weakest reading since October 2021.
Inflation declined for the second consecutive month in May. This suggests that price pressures have passed their peak and will continue cooling ahead on a tougher base effect and the Central Bank’s recent rate hikes. That said, our panelists see inflation lingering at double-digit levels until Q4. Core inflation remains sticky, stoked by a higher minimum wage, price indexation and elevated inflation expectations. A key factor to watch is gasoline prices: The government may reduce subsidies for the fuel further ahead as it seeks to cut spending to meet the fiscal rule.