Background on Colombia’s Economic Context
Colombia, the fourth-largest economy in Latin America, has been experiencing rising inflation rates. The country’s central bank aims to maintain a 3% annual inflation rate, but recent data suggests that the actual inflation is moving further away from this target.
October Inflation Data
Colombia reported an inflation rate of 0.18% in October, which surpassed market expectations and pushed the annual inflation rate to its highest level in 13 months, according to the National Administrative Department of Statistics (DANE).
- October’s inflation rate was higher than the projected 0.13% by market analysts, as reported by Reuters.
- This marks a significant increase compared to the 0.13% decrease in October 2024 and the 0.32% rise in September.
The monthly variation was primarily driven by price increases in the following sectors:
- Recreation and Culture: 0.81%
- Healthcare: 0.65%
- Hospitality and Public Services: 0.41%
- Miscellaneous Goods and Services: 0.38%
- Alcoholic Beverages and Tobacco: 0.37%
- Restaurants and Hotels: 0.27%
- Clothing: 0.22%
- Transportation: 0.14%
- Household Goods: 0.12%
- Education: 0.06%
Meanwhile, food prices decreased by 0.35%, and the information and communication sector experienced a 0.02% drop.
Annual Inflation Trends
Between January and October, Colombia’s inflation rate accumulated to 4.74%, compared to 4.44% during the same period in 2024.
Over the past 12 months, up to October, consumer prices increased by 5.51%, the highest level since September of the previous year and further distancing itself from the central bank’s 3% target.
Central Bank’s Response and Market Expectations
In response to the delayed convergence of inflation towards the target, the Colombian central bank has maintained its reference interest rate at 9.25% since April, when it was reduced by 25 basis points.
The technical team of the central bank recently updated their inflation forecast for this year to 5.1% from a previous estimate of 4.7%, and for 2026, they adjusted the projection to 3.6% from a prior estimate of 3.2%.
Market expectations now point to the reference rate ending the year at 9.25%, while anticipations for the end of 2026 have risen to 8.25% from a previous estimate of 8%.
Key Questions and Answers
- What is the current inflation rate in Colombia? The inflation rate in Colombia is 0.18% for October, pushing the annual inflation rate to its highest level in 13 months at 4.74%.
- Which sectors contributed to the rise in inflation? The main contributors to the increased inflation were recreation and culture, healthcare, hospitality and public services, miscellaneous goods and services, alcoholic beverages and tobacco, restaurants and hotels, clothing, transportation, household goods, and education.
- How does Colombia’s inflation compare to the central bank’s target? The actual inflation rate is moving further away from the central bank’s 3% target, with the current rate at 5.51% over the past 12 months.
- What is the central bank’s reference interest rate? The reference interest rate in Colombia has been maintained at 9.25% since April.
- What are the market’s expectations for the reference rate? Market expectations suggest that the reference rate will end the year at 9.25%, with anticipations for the end of 2026 rising to 8.25%.
