Colombian inflation rate reaches highest level in the year

Summary

November’s headline inflation came at 0.13% MoM, higher than expected by the consensus (+ 0.06%) and slightly lower than expected BBVA (+ 0.17%). Thus, during the year to November inflation accumulates 3.4%. As we anticipated, housing was the group that contributed most to the monthly growth (contribution of 0.06 pp) due to rising prices of gas and energy. The core inflation indicators remained stable (growing at rates of 2.6% YoY), excepting the non-food inflation. This indicator recorded a slight acceleration going from annual growth of 2.9% in October to 3.2% in November. On the other hand, tradable inflation, on which one should expect some inflationary pressures due to the exchange rate devaluation, recorded a monthly variation of 0.16% (1.7% y/y). These results show that there are no demand pressures, neither positive nor negative, and thus we expect the central bank will leave its intervention rate on hold at 4.5% in its next meeting. In the coming months we expect inflation to accelerate further by additional increases in gas tariffs and the start (probability 75%) of El Niño. In any case, we do not see inflation exceeding the 4% upper limit of the central bank.

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