Colombia | Inflation completes 12-month decline to 7.4% in March

Summary

In March, monthly inflation was 0.70% and annual inflation was 7.4%, a reduction of around 37 bps compared to February. The result was slightly above market analysts' expectations, who according to the Banco de la República's survey expected a monthly variation of 0.64%.

Key points

• Key points:
• Food inflation continued to decline in annual terms, reaching a variation of 1.7%, 20 bps below the previous figure. This result was favoured by reductions in the annual change of processed foods and meats. This behaviour counteracted the upward effect observed in the annual inflation of perishables, which registered an increase in annual terms.
• Non-food inflation also declined in March, standing at 8.76%, 44 bps lower than in February. The basket of goods once again took the lead, registering the largest reduction compared to the previous month's figure, reaching an annual change of 3.1%. The adjustments in this basket have benefited from the moderation in the exchange rate as well as lower consumer demand.
• The second basket, among the non-food components, that showed the largest reduction was the administered prices basket, which decreased by 23 bps compared to the previous month, reaching an annual change of 15.8%. The reductions in this basket are mainly due to the effects of high levels of comparison compared to the same month of the previous year.
• The basket that showed the smallest decline was services, exhibiting an annual change of 8.3%, 18 bps below February's figure. Indexation factors are also present in this basket, which are expected to remain strong, for example, in the rent subclass.
• BBVA Research expects inflation to maintain a downward path during 2024, with a moderate pace of declines in the following months and accelerating towards the second half of the year. With this, inflation would close the year close to 5.4%.

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