Colombia | Annual inflation reached double digits in July: 10.2%

Summary

In July, inflation reached a double-digit annual variation of 10.21% and a monthly variation of 0.81%, above analysts' expectations (average monthly variation of 0.53% according to Banco de la República's survey) and BBVA Research.

Key points

• Key points:
• Food inflation reached a monthly variation of 1.1%, well above its pre-pandemic historical average of 0.02%, which in annual terms brought the figure to 24.6%, with an acceleration of 96 bps.
• The normalisation of prices in clothing and footwear after the VAT-free day in June led to increases of 3.6% in the monthly change of this division, which contributed 12 bps to the final result, in line with our expectations.
• The acceleration in core inflation was also associated with pressures in administered prices, with the increase in the shelter and services division, led by rises in electricity, and in transport as a result of the increase in fuel and high vehicle prices.
• We expect a very gradual moderation in agricultural production costs over the second half of the year and some base effects that will help inflation to tame. In addition, the current outcome could imply a closing inflation rate above 9.2%.

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