Inflation in Colombia Resumed Its Decline in May

Colombia’s annual inflation for May closed at 5.05%, according to data from the National Administrative Department of Statistics (DANE). This figure represents a slight relief from a trend that had stalled in previous months, particularly after April.

This return to a downward path—though still far from the ultimate target of the government and monetary authorities—supports the Colombian economy, which remains highly sensitive to both domestic and external decisions.

Colombian inflation resumes downward trend in May

Over the past year, Colombian inflation showed significant decline, falling from peaks near 13% in 2023 to more moderate rates. However, since late 2024, the annual variation had remained in a range between 5.0% and 5.3%, lacking a clear downward trend toward the central bank’s target (3%).

In April of last year, inflation stood at 7%, while between June 2024 and March 2025, the decline was sustained to levels near the current rate. Two months ago, however, the CPI saw a slight uptick, reaching 5.16%, which raised concerns among monetary authorities who defended their cautious interest rate reduction policy.

Finally, last May closed with annual inflation at 5.05%, marking a tentative return to the downward path and, above all, a reduction of just over two percentage points compared to the figure from a year ago (7.16%). This context reveals an economy that, though still far from its inflation target, is attempting to regain stabilization.

Possible reasons for Colombia’s inflation slowdown

Although the decrease is minimal (0.11%), DANE representatives indicated the decline primarily affected food prices, with contained increases due to appreciation of the Colombian peso (approximately 2.86% against the dollar last month). Similarly, appliances, vehicles, and imported supplies also saw reduced pressure from the stronger exchange rate.

Meanwhile, elements that had driven inflation in 2023 and early 2024—such as energy and fuels—remain at controlled levels or are declining. Within the CPI, some categories continued upward pressure: rents (indexed to CPI), which contributed nearly +0.12 percentage points in May; regulated public utilities (water, electricity), which rose due to tariff adjustments; and meals outside the home, which saw a modest monthly increase of about 0.3% but an annual rise of 7.41%.

Andrea Ramírez Pisco, Deputy Director of DANE, noted that education and tourism did not significantly impact May’s figures (education saw no change, while tourism—reflected in transportation, recreation, and culture—varied by -0.08% and -0.52%) due to typical second-quarter consumption patterns.

“Education showed no variation in May because changes typically occur during months with tuition payments. Tourism follows similar patterns tied to vacation seasons,” Ramírez Pisco explained.

Implications for the economy and monetary policy

Given this situation, the outlook for Colombia’s economy remains uncertain but opens possibilities for further interest rate cuts. Moderating monthly inflation and an annual figure below expectations could strengthen the case for the central bank to cut interest rates again (currently at 9.25%) at its June meeting.

However, annual inflation remains far from the target range (3%), causing concern among analysts. A Reuters survey projected CPI near 5.12%, while year-end 2025 expectations hover around 4.8%. These figures will continue driving price increases in categories like rent, energy, and some foods.

Rises in staple goods—meat, fish, potatoes, vegetables—disproportionately affect lower-income households, who allocate a larger share of their budget to food. While price containment in some supplies brings relief, pressure in other areas persists.