Colombia | Inflation in August accelerated its decline to 6.12%

In August, monthly inflation was 0.00% and annual inflation was 6.12%, surprisingly well below market analysts' expectations according to Banco de la República's survey (0.24%). With this, the result is 74 bps below the previous month's figure and accelerates the pace of adjustments of previous months.

Key points

• Key points:
• Food inflation was the main protagonist this month: it stood at 3.38%, decreasing by 188 bps compared to the previous month's figure. The decline was driven by a significant reduction in the processed food sub-basket, where inflation fell from 10.5% in July to 5% in August.
• Non-food inflation, on the other hand, maintained the pace of declines seen in July, from 7.24% in July to 6.78% in August, a decrease of 46 bps from the previous month's annual figure.
• The largest downward adjustment came from the regulated basket, which stood at 11.1% in annual change, 104 bps lower than in July. Within this, the downward pressure is explained by the fact that services such as electricity and rubbish collection registered negative monthly variations, to which was added the base effect on account of fuels.
• The basket of services, meanwhile, registered an annual change of 7.45%, down 25 bps from July. The declines were favoured by adjustments in subclasses such as airline tickets, package tours, tuition fees in higher education institutions and transport insurance.
• BBVA Research expects inflation to maintain its downward path in the remainder of 2024. From non-food inflation, a gradual dissolution of persistence in baskets such as services is expected to continue, to which downward base effects from subclasses such as fuel, electricity and rents will be added. On the other hand, uncertainty remains regarding the effect of climatic factors and inflationary inertia.

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