Colombia’s 12-month inflation hits 5.05% in May, lower than expected. The consumer price index rose by 0.32%, with food and housing costs driving inflation. Analysts have adjusted their year-end forecast to 4.8%, missing the target inflation rate for the fifth consecutive year. The central bank’s interest rate was reduced to 9.25% in April amid economic uncertainty.
Colombia’s inflation remains a talking point as it reached 5.05% over the past twelve months, according to the national DANE statistics agency, which published its findings on Monday. This figure is surprisingly lower than what many analysts had forecasted, especially in a recent Reuters poll, where the expected inflation hit 5.13% with a predicted 0.40% rise in monthly consumer prices. Instead, consumer prices rose by just 0.32% in May.
Analysts seem to be adjusting their outlook, increasing their inflation forecast for the end of 2023 from 4.55% to 4.8%. If this higher projection holds, Colombia is poised to miss its target inflation rate of 3% for the fifth consecutive year. The recent price increases have been primarily influenced by rises in housing, public services, and food, alongside non-alcoholic beverages.
Interestingly, one of the more notable developments was the decline in costs related to recreation and culture, which marked the largest monthly drop. A closer look reveals that prices of food and non-alcoholic beverages rose by 0.60% in May compared to the previous month, while housing and public services saw an increase of 0.48%.
Earlier this year, Colombia’s central bank made a significant move by cutting the benchmark interest rate by 25 basis points to settle at 9.25%. This unexpected decision followed a wave of reduced inflation predictions, economic challenges, and an uncertain international financial landscape.
In summary, Colombia’s May inflation rate of 5.05% comes as a surprise, being lower than analysts’ estimates. While the inflation forecast for year-end has been slightly raised, the rising prices in key sectors indicate ongoing economic challenges. The central bank’s recent interest rate cut reflects an attempt to address these fiscal hurdles amid a challenging global economic environment.
Original Source: www.tradingview.com
