Economic Recovery and Inflation Trends
Colombia reported an annual inflation rate of 4.82% in June, the lowest since 2021 and below the 7.18% recorded in June 2024, according to the National Administrative Department of Statistics (DANE).
This marks the first time since October 2021 that Colombia’s price increase has fallen below the 5% threshold, confirmed Andrea Ramírez, DANE’s deputy director, during a press conference on Monday.
However, the 12-month indicator is still far from the Banco de la República’s target of 3% by the end of 2025.
Economic Recovery and Inflation
Colombia has experienced a moderate economic recovery since the beginning of the year, following a period of high inflation and meager growth post-COVID-19 pandemic.
- In the first six months of 2024, prices increased by 2.36%.
- The monthly inflation rate in June was 0.1%.
The sectors with the highest price increases during June were education (7.56%), restaurants and hotels (7.44%), transportation (5.27%), and services of accommodation, water, and electricity (5.23%).
Unemployment and Government Measures
According to DANE, Colombia’s fourth-largest Latin American economy grew by 1.7% in 2024, a slight recovery after years of low indicators.
- Urban unemployment has continued to decline, marking its seventh consecutive monthly decrease in May at 9%.
Alongside the economic expansion and progressive inflation moderation, President Gustavo Petro aims to increase state investment. To achieve this, he suspended the fiscal rule in June, which sets limits on public spending.
Impact of Government Decisions
In response to this decision, financial agencies Moody’s and S&P announced at the end of June downgrades to Colombia’s public debt rating.
Colombia’s net public debt in 2024 equaled 60% of GDP, according to the Executive.
Key Questions and Answers
- What is the current inflation rate in Colombia? The annual inflation rate in Colombia is 4.82%, the lowest since 2021 and below the 7.18% recorded in June 2024.
- How does this compare to the Banco de la República’s target? The current inflation rate is still far from the Banco de la República’s target of 3% by the end of 2025.
- What sectors experienced the highest price increases in June? The education sector saw a 7.56% increase, followed by restaurants and hotels (7.44%), transportation (5.27%), and accommodation, water, and electricity services (5.23%).
- What is the current state of Colombia’s economy? Colombia has experienced a moderate economic recovery since the beginning of 2024, growing by 1.7% after years of low indicators.
- What is the current urban unemployment rate in Colombia? Urban unemployment has been decreasing, marking its seventh consecutive monthly decline in May at 9%.
- What measures has President Gustavo Petro taken to boost the economy? President Petro suspended the fiscal rule in June to increase state investment, aiming for economic expansion and inflation moderation.
- How have financial agencies responded to these measures? Financial agencies Moody’s and S&P downgraded Colombia’s public debt rating in response to the suspension of the fiscal rule.
