Colombia | In July, annual inflation resumed its downward trend, standing at 6.9%

In July, monthly inflation was 0.20% and annual inflation was 6.86%, close to market analysts' expectations, according to Banco de la República's survey (0.28%) and our forecast (0.24%). With this, the result is 32 bps below the previous month's figure.

Key points

• Key points:
• Food inflation remained almost unchanged from the previous month's figure, with an annual change of 5.26%. This result was explained by some upward pressures from perishables, whose annual variation increases to 10.5% and processed food, which reached an annual inflation of 4.4%. Despite this, the meat sub-basket offset the effect with a reduction in its annual inflation.
• Non-food inflation declined by about 40 bps to 7.24%. Within the result, administered prices inflation showed the largest downward adjustment, decreasing by 112 bps due to reductions in electricity tariffs and base effects.
• The basket of goods also declined in its annual change, with an adjustment of -23 bps, bringing annual inflation to 1.2%. In particular, this basket continues to exhibit significant base effects, in addition to a monthly change that is below the historical average.
• The basket of services fell at a similar pace to that of goods, decreasing by 20 bps from the previous month's figure. With this, it reached an annual change of 7.69%. The reduction is largely explained by base effects, although it still has upward pressures from subclasses such as rents.
• At BBVA Research we expect food inflation to continue to decline although uncertainty remains high due to climatic factors, such as the La Niña phenomenon. Core inflation, meanwhile, will continue to decline in the remainder of the year, helped by base effects from subclasses such as rents and fuels. Thus, we expect total inflation to continue its downward path and to close the year at 5.4%.

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