Colombia | Annual inflation continued to decline, reaching 8.35%

In January, monthly inflation was 0.92% and annual inflation was 8.35%, very close to the expectations of market analysts, who according to the survey of Banco de la República expected 0.93% in the monthly variation.

Key points

• Key points:
• Food inflation stood at 2.96% in annual variation, decreasing 205 bps compared to the 2023 closing data, the lowest figure since February 2019. This result is mainly explained by the perishable basket, which was largely driven by a base effect when compared against January 2023. In addition, processed products also registered relevant decreases in the annual variation.
• Annual non-food inflation stood at 9.69%, decreasing by 64 bps compared to the previous month's figure, and reaching the lowest figure since November 2022. This was largely favored by base effects. The basket with the most reductions was that of goods, which went from annual inflation of 7.1% to 5.8%, falling by 131 bps.
• Administered prices’ basket registered the second largest adjustment within non-food inflation, at 16.4% in annual terms, 83 bps below the previous figure. This showed upward pressures from fuels, urban transportation and electricity.
• The basket of services also showed decreases, standing at 8.6% in annual terms, 33 bps below December's figure. There were downward pressures from subclasses associated with tourism, and upward pressures from subclasses associated with meals away from home, rents, electricity and domestic services.
• BBVA Research expects inflation to show reductions during the following months, which however will maintain important pressures associated with indexation factors. We expect inflation to close 2024 about 5.4%.

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