Background on Colombia’s Inflation Report
Colombia reported an inflation rate of 0.32% in May, which was lower than market expectations, according to the National Department of Statistics (DANE). The market had anticipated a 0.40% rise in consumer prices for May, as per a recent Reuters survey.
May Inflation Breakdown
The May inflation rate, at 0.32%, was a decrease from the previous year’s 0.43% in May and 0.66% in April. The most significant price increases were observed in:
- Food and non-alcoholic beverages: 0.60%
- Accommodation and public services: 0.48%
- Clothing: 0.39%
- Alcoholic beverages and tobacco: 0.39%
Healthcare costs rose by 0.39%, restaurant and hotel expenses increased by 0.36%, and diverse goods and services saw a 0.28% rise.
However, there were decreases in:
- Recreation and culture: -0.52%
- Information and communication services: -0.15%
- Transportation: -0.06%
Annual Inflation Trends
From January to May, Colombia’s cumulative inflation rate was 3.63%, compared to 3.78% in the same period last year. Over the past 12 months (until May), inflation reached 5.05%, down from 7.16% in the corresponding period the previous year—its lowest level since October 2021.
Impact on Monetary Policy
The behavior of inflation is a crucial indicator for the Central Bank when determining its policy interest rate. In their previous meeting in April, the bank reduced the policy rate by 25 basis points to 9.25%.
Key Questions and Answers
- What was Colombia’s inflation rate in May? The inflation rate was 0.32%.
- What did the market expect for May’s inflation? The market anticipated an inflation rate of 0.40%.
- Which sectors experienced price increases in May? Food and non-alcoholic beverages, accommodation and public services, clothing, alcoholic beverages and tobacco, healthcare, restaurants and hotels, and diverse goods and services all saw price increases.
- Which sectors experienced price decreases in May? Recreation and culture, information and communication services, and transportation all experienced price decreases.
- What is the annual inflation rate from January to May 2023? The cumulative inflation rate is 3.63%.
- What was the inflation rate over the past 12 months until May? The inflation rate was 5.05%.
- How does inflation impact monetary policy in Colombia? The Central Bank uses inflation as a key indicator to adjust its policy interest rate. In April, the bank lowered the policy rate by 25 basis points to 9.25%.
