Inflation continues to fall in Colombia as the year-over-year rate in July came in at 3.40% to hit a low not seen since 2014. According to figures released this weekend by the National Administrative Department of Statistics (DANE), inflation is now well back within the central bank’s target range of between 2%–4%.
The July inflation rate is a decrease from the 3.99% seen in June and represents the 12th straight month that inflation has fallen in Colombia.
From June to July, the consumer price index actually fell by 0.05%. Drops in food and housing prices contributed the most to the overall reduction, and recreation prices also fell significantly.
Year-over-year core inflation, which excludes more-volatile food and energy prices, also fell below 5% for the first time since September 2015.
The year-to-date inflation rate now stands at 3.3%, well below the 5.65% registered from January through July in 2016.
The ongoing reduction comes as good news to Colombia’s central bank, the Banco de la República, which has been cutting Colombia’s key interest rate significantly throughout the year in hopes of kickstarting more economic activity.
While recognizing that low-growth is now the biggest risk to the Colombian economy, the committee of the bank has also continually expressed concerns that the inflation rate would begin to creep back up in the second half of 2017 in response to lower interest rates and moderating food prices.
But thus far inflation only continues to fall.
At its July meeting, after reducing the interest rate to 5.5%, the committee forecasted that inflation will finish 2017 at 4.28% and land at 3.52% in December 2018.
Photo credit: Jared Wade