Colombia | Total annual inflation stopped 13 months of declines in May and stood at 7.16%

Summary

In May, monthly inflation was 0.43% and annual inflation was 7.16%, close to market analysts' expectations, according to Banco de la República's survey (0.41%) and below our forecast (0.51%).

Key points

• Key points:
• Annual food inflation accelerated for the second consecutive month, mainly due to a strong base effect. Monthly food inflation stood at 0.51%, significantly above the -0.85% recorded for the same month last year.
• On the other hand, non-food inflation continued its downward trend with a 36 bps reduction, reaching an annual inflation rate of 7.8%, the lowest since August 2022, although the moderation was also the weakest so far this year.
• The basket of goods also continued to contribute to the reduction of inflation with a negative monthly variation of -0.1% and an annual variation of 1.7%, the lowest since April 2021 and with a reduction of 66 bps compared to April's figure. The monthly inflation of this basket is even below the historical average.
• On the other hand, the basket of services showed a meager reduction in its annual inflation, standing at 7.9% (7 bps below April's figure). This result ratifies the persistence of services inflation. The monthly variation stood at 0.62%.
• At BBVA Research we expect food inflation to continue to accelerate in June and maintain high levels in the third quarter; however, we believe that the effect will be transitory and will not affect inflation at the end of the year. On the contrary, we believe that non-food inflation will continue to show relief, which will shift from goods to services as the year progresses, although still with high uncertainty from regulated goods and persistence in some services such as rents.

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