Colombian Inflation Rate Beats Expectations in April, Slowing to 7.16% Year-Over-Year

Colombia’s month-over-month inflation number came in for April (up 0.59%), bringing the 12-month consumer price index (CPI) increase to 7.16%.

While this was slightly better than expected, the positive difference is likely not enough to radicalize the central bank into taking more drastic measures at the end of the month. Fedesarrollo continues to anticipate a year-end CPI rate of of 5.51% — but we are already at 3.34% year-to-date.

The complications related to El Niño may be disappearing into the rearview mirror, but La Niña is now on the horizon — and won’t be helpful when it comes to inflation. Even thought we have been falling for 13 straight months — and 12 months ago we were at 12.82% — Banco de la República is behind the curve.

Along the same lines, Fedesarrollo’s forecast for an year-end overnight interest rate of 8.25% is also looking optimistic given the conservative nature of the central bank.

El Niño, as mentioned, is gradually leaving us. This has helped energy reservoir levels rise from 28.0% to 34.5%, and while water rationing continues in Bogotá, consumption has fallen. Next up, also as mentioned, is La Niña and the expectation for heavy rainfall.

In terms of economic inflows, international tourism continues to boom, with 1.6 million visitors arriving in the first quarter of 2024, an increase of 7.6%. While Bogotá had the most visitors, there is no question that Medellín and Cartagena are drawing the most tourists. The main visitors thus far in 2024, accounting for 26.6%, are from the United States. Given the criminal news emanating from Medellín, in particular, in recent months, most are welcome but many are not — including those disparaging referred to as the “passport bros.”

Ecopetrol’s first quarter results were released this week as well, and thye were, as expected, negative year-over-year. Production was slightly down, however it was the decrease in the price of Brent oil and the stronger performance of the Colombian peso that did the damage.

Ricardo Roa, chief executive officer of Ecopetrol, has been under some political pressure recently, but he has no intention of stepping down. Instead Roa is concentrating on 2025 and the anticipated shortfall in gas supply. Venezuela is prepared to sell at a favorable price — but first the pipeline needs a lot of work. Additionally, given that the United States has reimposed its embargo, permission will need to be sought from Washington.

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