Inflation in Colombia Consolidates Downward Trend

Inflation in April in Colombia consolidated its downward trend. According to official data, the annual Consumer Price Index (CPI) for last month stood at 7.16 percent, completing thirteen months of consecutive declines. In March 2023, inflation peaked at 13.34 percent and since then it has only gone down, arriving at the current figure.

The comparison between March and April 2024 shows a decrease of 0.20 percent, which represents a certain moderation in the downward trend. However, government and economic analysts expect the figure to continue to fall until the end of the year. This means not only a relief for households and companies but also the option of continuing to lower interest rates and facilitate credit to consumers.

April inflation data for Colombia

The director of the National Administrative Department of Statistics (DANE), Piedad Urdinola, indicated that for this month the spending sector with the highest inflationary growth in April was food and non-alcoholic beverages (1.16 percent). Especially important were the increases in fruits and vegetables.

This sector was followed by accommodation, water, electricity and gas (0.93 percent), in the midst of the energy crisis and with water reserves at a record low, despite the start of the rainy season in much of the country. The largest price increases were recorded in the subclasses of services related to co-ownership (2.57 percent), electricity (1.56 percent) and rent (1.11 percent).

If the year is taken into account, that is, the difference in prices between April 2023 and April of this year, the most inflationary item is education, which accumulated 11.40 percent of increase in these twelve months. This is followed by transportation, with 10.42 percent, and restaurants and hotels, with 9.80 percent.

Meanwhile, information and communication is the one with the lowest variation at 0.03 percent. It is followed by recreation and culture, 2.02 percent, and the last one that is important for families, food and non-alcoholic beverages, with 2.98 percent.

Colombia’s inflation behavior in 2024

In the first four months of 2024, the increase in the CPI was 3.34 percent. This is mainly explained by the behavior during this time of the housing, water, electricity, gas and other fuels sectors, as well as food and non-alcoholic beverages.

The objective of the government and the bank of issue is to end the year with a CPI of around 5 percent, a figure that has been a working hypothesis since January. However, the objective is to fix the index above 3 percent during 2025, a figure much more frequent in the recent history of Colombian inflation.

Although the data are good, the figure in Colombia is still well above that of other countries in the region. In Brazil, for example, it fell to 4.18 percent, the lowest figure in two years. The figure in Chile increased slightly to close to 4 percent. Peru, meanwhile, reached 2.42 percent last month, the lowest rate in three years.

In the meantime, the central bank’s interest rate, although continuing to fall in parallel with inflation, remains high, straining the national economy. In the last decision just a week ago, the price of money was left at 11.75 percent, which continues to make credit difficult for many companies and consumers, who await further reductions.