Colombia’s annual inflation rate climbed to 6.24% in August 2026, its highest level since July 2024, according to consumer price data from the Departamento Administrativo Nacional de Estadística (National Administrative Department of Statistics, DANE) analyzed by Bancolombia. In a September 9 report, the bank, now organized under the financial holding company Grupo Cibest (NYSE: CIB; BVC: CIBEST, PFCIBEST) following a 2025 corporate reorganization, said the annual rate rose 20 basis points on a monthly increase of 0.39%, well above the 0.27% consensus forecast among analysts and the highest August monthly print since 2023. The report is signed by Laura Clavijo, Bancolombia’s chief economist; José Luis Mojica, its macroeconomic manager; Valentina Guáqueta Sterling, a central banking analyst; and Camila Caballero Mercado, an intern, all of the bank’s Economic, Industry and Market Research Area.

Services prices accounted for the bulk of the increase, contributing 22 of the month’s 39 basis points, or 57% of the total, which Bancolombia’s economists attributed mainly to the pass-through of wage and price indexation. Annual services inflation reaccelerated to 7.17% in August, the highest level since November 2024, after two months of moderation; the segment’s 0.45% monthly rate roughly doubled its historical August average of 0.22%. Rents, both actual and imputed, each rose 0.38% for the month, fixed and mobile communications and internet service jumped 0.92%, and cable and network television subscriptions rose 3.01%.

Inflation excluding food, as measured under the central bank’s traditional core classifications, reached 6.30% year over year, its highest level since October 2024 and a sixth consecutive monthly increase. Bancolombia’s team said that pattern suggests underlying price pressures are persistent rather than driven by temporary factors. Annual food inflation, by the report’s classification, reversed course, rising to 6.13% from 5.84% in July on a 0.72% monthly increase, eight times the historical August average of 0.09%, as perishable food prices, including fresh fruit, potatoes, tomatoes and legumes, jumped 10.75% year over year. Goods inflation reached 3.37%, its highest level since February 2024, even as an appreciating Colombian peso continued to hold down prices for new and used vehicles. Regulated prices, which include utilities and transit fares, rose 6.77% annually, their highest level since February 2025 and a sixth consecutive monthly increase, on higher electricity, sewerage, urban transportation, waste collection and parking tariffs.

Services contributed more than half of August’s 0.39% monthly inflation increase. (Chart: Finance Colombia, based on DANE data analyzed by Bancolombia / Grupo Cibest)

Bancolombia’s economists tie much of that persistence to indexation and to Colombia’s 2026 minimum wage, which rose 23% to $1,750,905 COP a month. The government reissued the increase on a provisional basis in Decree 0159 of February 19, 2026, to provide legal certainty while the Consejo de Estado (Council of State) reviews a challenge to the original decree, according to elempleo.com. Bancolombia said the pass-through has so far been uneven: it is already showing up clearly in services, particularly categories with annual contractual adjustments such as rents, but remains more contained in goods, where companies are still selling through inventory purchased at lower cost. As those stocks are depleted, the bank expects replacement costs to show up more broadly in consumer prices.

Bancolombia’s economists also expect the effects of El Niño in the second half of 2026 to add upward pressure. On September 10, Colombia’s Instituto de Hidrología, Meteorología y Estudios Ambientales (Institute of Hydrology, Meteorology and Environmental Studies, IDEAM) put the probability that the current El Niño becomes the strongest since 1950 at 75% for the fourth quarter of 2026, and the probability of a “very strong” episode through the first quarter of 2027 at more than 90%, according to El Tiempo. Grupo Cibest’s Food Prices Monitor, published September 4, had estimated annual food inflation for August at 5.7%.

Colombia’s annual inflation rate has trended higher since mid-2025 and remains more than double the central bank’s 3% target. (Chart: Finance Colombia, based on DANE data analyzed by Bancolombia / Grupo Cibest)

Colombia’s central bank, the Banco de la República (Bank of the Republic), targets annual inflation of 3% within a range of 2% to 4%. Its seven-member board raised the benchmark rate to 12% from 11.25% on June 30, 2026, according to El Colombiano, which reported that then-President Gustavo Petro criticized the decision. Petro said that with unemployment in May at the lowest level of the century, “raising the interest rate even further leads only to paralysis.” The board held the rate at 12% on July 31 by a 4–3 vote, with the three dissenting directors favoring a further 50-basis-point increase, according to the central bank. Bancolombia’s economists forecast that the rate will stay at 12% in the months ahead; the board meets next on September 30, 2026.

“The Central Bank will be compelled to maintain a restrictive monetary policy stance to keep inflation expectations anchored.”

— Bancolombia’s Economic, Industry and Market Research Area, August 2026 inflation report

Bancolombia said it expects annual inflation to finish 2026 above 6.5%. BBVA Research said in a September 8 analysis, reported by ABC Economía, that it expects inflation to close the year near 7%, citing domestic demand, El Niño and possible supply shocks. The central bank’s monthly survey of economic analysts, published September 17, raised the year-end inflation expectation to 6.81% from 6.60% and showed analysts expecting a single rate increase, to 12.25%, at the board’s December meeting, according to La República.

Headline photo by catamejia18 from Pixabay

The bank’s economists estimate that each percentage point of peso appreciation reduces annual goods inflation by 0.16 percentage points over twelve months. On the consumer price index as a whole, the effect is considerably smaller. A previous Grupo Cibest analysis found that a 1-point currency depreciation drives a 0.12-point rise in headline inflation over a year; this report finds that an appreciation of the same size lowers headline inflation by no more than 0.04 points over the same horizon — roughly a third of the force. The exchange rate’s pass-through into prices, in other words, works much harder on the way up than it does on the way down.

Grupo Cibest’s own conclusion is blunt about what that means for consumers.

“The strength of the peso has contained inflation, but it does not correct it.”

— Grupo Cibest, economic research team

Why a stronger peso doesn’t show up at the register

Goods are the main channel through which the exchange rate reaches Colombian consumers, since their production and distribution depend heavily on imported inputs and finished products. Grupo Cibest’s model — an asymmetric autoregressive distributed-lag specification that controls for the business cycle, monetary policy and global oil prices — points to three factors that keep the pass-through incomplete.

The first is inventory rotation: much of what is on store shelves today was bought months ago under exchange rates that no longer apply, so a lower dollar takes time to show up in available merchandise. The second is asymmetry in firms’ pricing incentives — companies are reluctant to cut prices in response to currency moves they see as transitory, even as they raise prices quickly when the dollar rises. The third, and the most relevant to the current moment, is margin recomposition: during Colombia’s prior depreciation cycle, firms absorbed part of the shock instead of passing the full cost of a pricier dollar on to consumers, sacrificing a share of their profit per unit sold. The recent strength of the peso has let them restore those margins instead of passing the lower cost on to shoppers. Resilient household demand has reinforced the pattern — consumption remains one of the main drivers of Colombia’s economic activity, giving firms room to sustain prices even as import costs fall.

Colombia’s benchmark exchange rate (TRM) against goods inflation, annual percent change, August 2015 to August 2026. (Chart: Grupo Cibest; source: SetFX, DANE)

A shrinking share of a larger basket

Goods carry a weighting of just 18.56 percent in Colombia’s consumer price index, so even a full pass-through would have a modest effect on the headline number. Services and regulated prices, which make up most of the rest of the basket, respond mainly to domestic drivers — wages, indexation and local demand for services, and tariff-setting decisions for regulated prices — with limited exposure to the dollar. Food prices sit in between: they use some imported fertilizer and grain, but their behavior is driven mostly by weather and other agricultural conditions.

Even within an imported good, the final price a consumer pays layers on costs that have nothing to do with the exchange rate: rent, domestic transportation, staff salaries, advertising and taxes. Those links in the chain cushion the shock as it travels down the supply chain — a lower exchange rate reduces the cost of bringing merchandise into the country, but that savings represents only a small share of what a shopper ultimately pays.

The size of the currency move matters too. International evidence shows pass-through loses strength as an exchange-rate swing gets larger, since firms absorb a growing share of the shock in their margins and space out price adjustments to avoid revising them too often. That dynamic explains the current disconnect: despite an appreciation of nearly 20 percent over the past year, goods inflation has been rising for seven straight months, and the headline index has not delivered the relief the size of the currency move would imply. The pass-through operates with a lag, transmits only partially, and competes against cost pressures pulling in the opposite direction.

Contribution to annual inflation by basket component, December 2024 to August 2026. Services have driven the bulk of the rise to 6.24 percent in August. (Chart: Grupo Cibest; source: Banco de la República)

A reversal would hurt more than the rally has helped

The asymmetry carries a warning for what comes next: if the peso gives back part of its recent strength, Grupo Cibest expects the effect on prices to be larger than what the appreciation has delivered, because firms pass along cost increases faster than they pass along cost reductions. The ongoing fiscal debate and external financing conditions will be the key drivers of where the dollar-peso rate goes from here. The exchange rate’s contribution to moderating inflation is therefore likely to stay limited: a stronger peso has held down goods prices, but its reach over the total inflation rate is narrow, and it competes with pressures of a different origin, including wage adjustments and food-supply shocks. The peso’s strength has contained Colombia’s inflation, in short, but it has not corrected it — further disinflation will depend on domestic factors rather than the dollar.

Colombia’s inflation accelerated again in August

The backdrop for that debate is an inflation rate still moving the wrong way. DANE, Colombia’s Departamento Administrativo Nacional de Estadística (National Administrative Department of Statistics), reported annual inflation of 6.24 percent in August, up 20 basis points from July, its highest level since July 2024 and just above Grupo Cibest’s own forecast of 6.19 percent. The monthly print of 0.39 percent far exceeded the average analyst forecast of 0.27 percent and was the highest print for the month of August since 2023. Services explained 57 percent of the month’s inflation, contributing 22 of the 39 basis points of the increase, largely on the pass-through of wage indexation. Inflation excluding food hit its highest level since October 2024, the sixth consecutive monthly increase. Grupo Cibest expects the upward pressure to persist on continued indexation, rising labor costs, regulated-tariff adjustments and the impact of the El Niño weather pattern in the back half of the year.

Other gauges of the Colombian economy showed a mixed picture for July. Retail sales are estimated to have grown 13.0 percent year over year, driven by a 19.9 percent jump in vehicle sales, even as vehicle sales showed signs of moderating from the 45.7 percent average pace recorded so far in 2026. Manufacturing output is estimated to have contracted 1.0 percent over the same period, a decline Grupo Cibest links to lower industrial-input imports and softer energy demand, partly offset by improving business confidence; the peso’s 19.2 percent annual appreciation has also cut the cost of imported inputs, even as it makes finished goods made abroad more competitive against local production.

Colombia’s Economic Tracking Index, the Índice de Seguimiento a la Economía (ISE), is estimated to have grown 2.8 percent year over year in July, below its four-month average of 3.7 percent, reflecting an uneven performance across sectors. Primary activities faced climate-related risks and the effect of the stronger peso on export competitiveness, particularly for coffee, even as mining outperformed on favorable oil and non-monetary gold output. Construction showed a mixed picture, with civil works offsetting persistent weakness in housing, while services — including entertainment, public administration, and trade, transportation, accommodation and food services — stayed dynamic.

Consumer sentiment offered a brighter note. Grupo Cibest projects Fedesarrollo‘s Consumer Confidence Index reached 21 points in August, a 0.3-point monthly gain and a 23.4-point jump from a year earlier, which Grupo Cibest attributes to sustained declines in unemployment, strong durable-goods consumption and the stronger peso, alongside favorable signals from economic activity and nominal income growth — though persistent inflation and international geopolitical uncertainty could temper the index in coming months. Separately, Fedesarrollo’s Economic Policy Uncertainty Index fell to 194 points in August, down 42 points from July and 77 points from a year earlier, though still above its 2000-2019 historical average of roughly 100 points — a decline the think tank tied to the removal of electoral uncertainty and stronger-than-expected second-quarter GDP.

A global backdrop of renewed inflation pressure

Colombia’s story is unfolding against a global economy where inflation risk is resurfacing rather than fading. In the United States, the Bureau of Labor Statistics reported that annual consumer inflation ticked up 0.03 percentage points to 3.4 percent in August, in line with market expectations and the highest reading since June, as energy prices climbed on a 0.40 percent monthly increase. Core inflation, which excludes food and energy, eased 0.03 percentage points to 2.45 percent, also in line with consensus. Markets now assign better than 60 percent odds to a 25-basis-point increase at the Federal Reserve‘s September 15-16 meeting, which would lift the target range to 3.75-4.00 percent; the Fed is likely to take a cautious stance as it weighs whether easing core prices offset renewed energy-driven pressure.

Producer prices accelerated more sharply: the annual Producer Price Index jumped to 5.4 percent in August from 2.7 percent in July, driven largely by a 1.1 percent monthly rise in final-demand goods prices, a sign that the run-up in energy costs tied to the escalation of the Middle East conflict is beginning to feed into US production costs.

US consumer confidence sent a starker signal. The University of Michigan‘s consumer sentiment index fell to 47.8 in September from 51.7 in August, well below the 51.0 the market had expected, as households’ views of both current conditions and the outlook deteriorated on the back of Middle East tensions and rising fuel prices. Sentiment has now fallen 16.0 percent since February, before the conflict began, and 13.0 percent from a year earlier; one-year inflation expectations rose 0.6 percentage points to 4.6 percent, the highest since June.

The European Central Bank raised its deposit rate by 25 basis points to 2.50 percent, its third increase this cycle, citing sustained inflationary pressure tied to the Middle East conflict and projecting inflation will stay above its 2 percent target through at least 2028 — even as it revised its 2026 and 2027 growth forecasts upward, to 0.9 percent and 1.4 percent, respectively. In China, the National Bureau of Statistics reported consumer inflation accelerated to 0.8 percent annually in August, its fastest pace since May and in line with market expectations, while producer prices rose 3.8 percent, beating analyst forecasts on higher energy costs, commodity prices and technology-sector demand. Inflation across Latin America showed similar upward pressure in August, with Peru accelerating to 4.44 percent on higher food prices — its highest since April — and Chile rising to 4.13 percent on energy and services costs. Mexico’s rate climbed to 3.26 percent, its first acceleration since March, on stronger goods and food prices. Brazil was the exception, with inflation easing to 4.22 percent from 4.44 percent on softer food and fuel costs.

Bond markets reprice for a longer tightening cycle

Fixed-income markets moved to reflect the firmer inflation outlook. The US Treasury curve sold off between September 4 and September 11, with yields on two- to seven-year notes rising an average of 24 basis points and ten- to thirty-year maturities climbing 14 basis points; the 10-year yield rose 16 basis points to 4.94 percent. Emerging-market sovereign bonds were mixed: Colombia and Malaysia led increases with yields up 33 basis points, followed by Poland (30 basis points) and Peru and the Czech Republic (22 basis points each), while China, Romania and Indonesia posted modest declines and Brazil and Turkey rallied, with yields falling 46 and 52 basis points, respectively. JPMorgan‘s pricing shows markets now assign roughly 90 percent odds to a 25-basis-point Fed increase at the September meeting, with traders pricing further gradual increases beyond that as persistent inflation pushes out the expected length of the tightening cycle.

Colombia’s peso-denominated government bonds, known as TES, sold off in sympathy: yields on the fixed-rate curve rose an average of 16 basis points across short-, medium- and long-dated maturities following August’s inflation surprise. Locally, markets watched proposals from Colombia’s Director of Public Credit, an office within the Ministerio de Hacienda (Finance Ministry), aimed at strengthening liquidity and access to the public debt market. Pension funds, known by the Spanish acronym AFP, led net purchases of TES in the secondary market during August at $4.9 trillion COP, followed by trust companies at $3.1 trillion COP and the Banco de la República — Colombia’s central bank — at $1.5 trillion COP; commercial banks were the largest net sellers at $5.3 trillion COP, followed by foreign funds at $2.2 trillion COP and the Finance Ministry itself at $1.4 trillion COP. The total outstanding stock of Class B TES reached $800.6 trillion COP at the end of August, up 19.8 percent from a year earlier and 0.3 percent from July.

The average coupon on the government’s Class B TES debt rose to 10.08 percent in August, its highest level since October 2023, up 9 basis points from July and 143 basis points since the end of 2025 — reflecting bonds issued earlier in the year at financing rates higher than those seen in 2025. The increase was driven in part by UVR-linked debt, whose average coupon climbed to 10.82 percent amid persistent inflation, while the coupon on fixed-rate TES rose to 9.72 percent, up 150 basis points for the year.

Peso gains alongside a spike in oil prices

The peso’s weekly gain came as Middle East tensions intensified further. Brent crude closed at $104.73 USD per barrel, up 8.78 percent for the week, while West Texas Intermediate settled at $102.48 USD per barrel, up 12.02 percent, as the conflict between the United States and Iran escalated and Iran-aligned Houthi rebels advanced on the Red Sea city of Mocha, threatening control of the Bab-el-Mandeb strait. Production by the Organization of the Petroleum Exporting Countries also fell in August after a collapse in Saudi Arabian output amid threats to the Strait of Hormuz and Red Sea shipping routes, while China’s own oil purchases increased, pushing up premiums on African and Latin American crude as buyers looked beyond the Persian Gulf amid the supply scarcity there. Markets have begun pricing the conflict extending beyond 2026, despite comments from US President Donald Trump suggesting a possible resolution tied to the November 3 legislative elections.

Banco de la República saw $296.3 million USD exercised of the $400 million USD awarded in its second reserve-accumulation options auction this month. Colombia’s theoretical devaluation curve showed mixed movement: the one-month tenor fell 1 basis point and the twelve-month tenor fell 4 basis points, while tenors between three and nine months rose an average of 3 basis points. The market-implied devaluation curve, by contrast, retreated across its full structure, reversing the prior week’s upward trend on sustained forward sales from offshore and institutional agents — even as the implied odds of a 25-basis-point Fed increase at its September 15-16 meeting rose to 86.5 percent by September 11, from 59.4 percent a week earlier.

The month split into two distinct phases, Grupo Cibest’s analysts wrote. Early in August, the Banco de la República (Bank of the Republic), Colombia’s central bank, surprised markets. Its board had voted at a July 31 session to hold the benchmark interest rate at 12% and to build up to $4 billion USD in international reserves through a new options-auction mechanism; when the bank ran the program’s first auction on August 3, buying $400 million USD, according to El Universal, the combination of the rate hold and the new dollar demand pushed the dollar down further against the peso. The mood reversed after August 27, when the government of President Abelardo de la Espriella, who took office August 7, submitted a revised 2027 National Budget to Congress that acknowledged a far deeper deterioration in public finances than previously disclosed.

The peso weakened sharply in the final days of August as the 2027 National Budget rattled markets. (Source: SetFX, prepared by Grupo Cibest; chart: Finance Colombia)

The revised budget raised the government’s projected total fiscal deficit from 5.3% to 7.2% of gross domestic product for 2026, and from 4.5% to 9.4% of gross domestic product for 2027, after incorporating obligations tied to debt service, pensions, health care, payroll costs, energy subsidies and the Fuel Price Stabilization Fund that had previously been underestimated. Grupo Cibest called the disclosure “a necessary reality check” and said clarity on the government’s medium-term fiscal adjustment plan, which has yet to be published, would be critical to the peso’s direction from here.

The 2027 National Budget nearly doubled the projected fiscal gap for both years. (Source: Colombia’s Ministry of Finance, prepared by Grupo Cibest; chart: Finance Colombia)

The currency’s slide happened despite favorable conditions abroad. The US Dollar Index fell 0.5% in August after a weak employment report, while Brent crude gained 0.3% to close the month at $90.04 USD per barrel — a combination that would typically support, not weaken, an emerging-market currency like the peso. Grupo Cibest said the divergence showed the depreciation was driven almost entirely by local, not global, factors.

A weaker dollar and firmer oil prices should have supported the peso in August; instead it depreciated. (Source: LSEG Workspace and SetFX, prepared by Grupo Cibest; chart: Finance Colombia)

Even with August’s reversal, the broader trend remains firmly in the peso’s favor. The exchange rate stayed below both its 50-day and 100-day moving averages for most of the month, and Grupo Cibest noted that the medium-term technical structure remains bearish for the dollar, with all three moving averages still trending downward. Analysts at Corficolombiana attributed the rally mainly to lower political and fiscal risk premiums tied to Colombia’s change of government rather than to any structural improvement in economic fundamentals, and it expects a partial correction in the exchange rate in the months ahead.

The exchange rate closed August below all three moving averages, a sign of sustained peso strength. (Source: LSEG Workspace, prepared by Grupo Cibest; chart: Finance Colombia)

The strong peso has split Colombia’s export sector from its import-dependent businesses and consumers. Between January and May, exporters stopped receiving approximately $12.2 trillion COP in revenue as a direct consequence of the currency’s appreciation, according to the same Corficolombiana analysis, with coal, bananas, flowers, coffee and labor-intensive manufacturing among the hardest-hit categories. Fenalco noted that those losses have been compounded by higher labor costs and by new United States tariffs on Colombian goods, which combine a 10% universal duty with an additional 2.5-percentage-point surcharge tied to labor-standards enforcement, and it pointed to Colombia’s 12% policy rate, one of the highest in the region, as a magnet for the short-term capital inflows that have helped drive the appreciation. Bruce Mac Master, president of the National Business Association of Colombia (ANDI), said in August that the trend was already undermining the country’s competitiveness as an exporter.

“The dollar is reaching levels of COP3,000, which without a doubt puts us in a very complex situation and takes away our competitiveness. It significantly affects exporters’ income when they convert it into pesos.”

— Bruce Mac Master, president, ANDI

Mac Master said Colombia should study measures to discourage those capital inflows, arguing that the central bank’s inflation mandate now competes with a bigger risk: eroding the country’s productive base. Corficolombiana’s own numbers suggest the picture is more mixed than exporters’ losses alone would indicate. The research firm estimated that cheaper imports saved Colombian businesses and households about $15.6 trillion COP over the same five months, for a net national benefit of roughly $3.4 trillion COP, and it found no significant widening of the trade deficit so far, in part because Colombia’s oil and gold exports have benefited from higher international prices even as their peso-denominated value has been squeezed by the exchange rate.

Tourism has felt a similar split. The association of travel and tourism agencies, Anato, told La República that the arrival of non-resident visitors fell 1.6% between January and May compared with the same period in 2025, as the stronger peso made Colombia a less attractive low-cost destination for foreign travelers. “The appreciation of the Colombian peso can create the perception of a more expensive country for foreigners, a situation that is worsened when combined with risk factors such as informality, security perceptions and travel warnings,” the association said. Anato’s executive president, Paula Cortés Calle, said the currency move complicates outbound travel as well: although a weaker dollar is usually seen as an incentive for Colombians to travel abroad, she said, the operational reality for travel agencies is more complex because of the time gap between quoting a trip and paying international suppliers.

Grupo Cibest expects the exchange rate to trade within a COP3,100-COP3,300 range in September, with risk running in both directions. On the upside for the dollar, the firm is watching the government’s promised Economic Rescue Act proposal, which it said would be critical in assessing Colombia’s ability to stabilize its public debt trajectory, along with continued pressure on US dollar liquidity. Foreign exchange intermediaries’ spot dollar cash position stood at $1.4 billion USD on August 9 before turning negative later in the month; Grupo Cibest expects it to settle near $800 million USD, well below the 2026 year-to-date average of $3.1 billion USD.

Dollar liquidity among foreign exchange intermediaries tightened sharply in the second half of August. (Source: Superintendencia Financiera de Colombia, prepared by Grupo Cibest; chart: Finance Colombia)

On the downside for the dollar, Grupo Cibest pointed to continued carry-trade activity, in which investors borrow in low-rate currencies to invest in higher-yielding Colombian assets, as well as to the central bank’s plan to keep purchasing close to $400 million USD in reserves per month through September. Additional support for the peso could also come from international aid tied to the reconstruction effort following the magnitude-7.4 earthquake that struck Chocó and neighboring departments on August 10.

As of September 7, the exchange rate stood at COP3,126, near the middle of Grupo Cibest’s forecast band, according to a market report carried by El Universal. Colombia’s August inflation figure, due the same day, was expected to remain above 6%, a reading that would keep pressure on the central bank to hold its policy rate steady even as the fiscal picture it revealed at the end of August continues to work through the market.

The monitor is built to anticipate Colombia’s official inflation reading before the National Administrative Department of Statistics, or DANE, publishes it. Grupo Cibest’s analytics team blends daily purchasing data from Servinformación, a company that tracks sales activity in neighborhood stores and small grocery outlets, with wholesale price information collected through DANE’s Sistema de Información de Precios y Abastecimiento del Sector Agropecuario (Agricultural Sector Price and Supply Information System), known by its acronym SIPSA. The report is signed by Laura Clavijo, Grupo Cibest’s chief economist and head of research; Arturo Yesid Gonzalez, quantitative and analytics manager; and Sebastian Ospina, data controller.

Perishable food prices drove Colombia’s food inflation in August 2026, rising 9.32% year over year versus 4.57% for processed food. (Chart: DANE, SIPSA, Servinformación; estimates by Grupo Cibest)

Perishable food prices rose 0.92% for the month and 9.32% year over year, more than double the pace of processed foods. (Chart: Finance Colombia, based on Grupo Cibest data)

Perishable food prices, the more volatile half of Colombia’s food basket, swung from a 0.83% monthly decline in July to a 0.92% increase in August, pushing their annual rate to 9.32%, Grupo Cibest said in the report. Processed food prices, packaged and industrially prepared goods that are less exposed to weather and harvest cycles, rose a comparatively modest 0.12% for the month, which Grupo Cibest said was two basis points above July’s reading, implying a July increase of roughly 0.10%; the annual rate for processed food stood at 4.57%.

Perishable food prices swung from a 0.83% monthly decline in July to a 0.92% increase in August 2026. (Chart: DANE, SIPSA, Servinformación; estimates by Grupo Cibest)

Perishable food prices reversed course within a single month. (Chart: Finance Colombia, based on Grupo Cibest data)

Grupo Cibest attributed the swing in perishables to “a combination of adverse factors,” naming wildfires in the department of Tolima, the advance of El Niño, and damage from the earthquake that struck Valle del Cauca and Armenia, in Quindío department. On August 10, a magnitude-7.4 earthquake centered near San José del Palmar, in Chocó department, struck a wide swath of western Colombia. As of August 24, Colombia’s disaster relief agency, the Unidad Nacional para la Gestión del Riesgo de Desastres (National Unit for Disaster Risk Management), had confirmed 331 deaths and 240 people still missing, with damage reported across 16 departments and 494 municipalities, including Valle del Cauca, Chocó, Quindío, Risaralda and Caldas, according to newspaper Vanguardia.

At around the same time, a wildfire season in Tolima burned more than 20,000 hectares of vegetation across 13 municipalities during August, according to reporting by El Tiempo. Colombia’s meteorological institute, IDEAM, has confirmed that El Niño arrived roughly three months earlier than initially projected and is on track to reach one of the strongest intensities recorded since 1950 by the fourth quarter of 2026.

Nearly every item in the fruits and vegetables segment got more expensive in August. Potatoes led the group with an 8.5% monthly jump, and prices for vegetables and legumes climbed 7.1%. Oranges were up 6.0%, rounding out the largest gains Grupo Cibest recorded for the category.

Potatoes, vegetables and legumes, and oranges led monthly produce price gains in Colombia in August 2026. (Chart: DANE, SIPSA, Servinformación; estimates by Grupo Cibest)

Potatoes led monthly gains in the fruits and vegetables segment. (Chart: Finance Colombia, based on Grupo Cibest data)

The picture was less uniform for animal protein. Processed meats climbed 1.15% for the month, the largest gain in that group, while beef added 0.4%. Pork moved the opposite direction, down 0.7%, and poultry slipped 0.3%. Grupo Cibest did not explain what is driving pork and poultry lower while beef and processed meats rise.

Protein prices were mixed in August 2026, with processed meats, beef, poultry and pork posting divergent monthly changes. (Chart: DANE, SIPSA, Servinformación; estimates by Grupo Cibest)

Processed meats and beef rose in August while pork and poultry prices fell. (Chart: Finance Colombia, based on Grupo Cibest data)

The estimate marks a sharp reversal from Colombia’s most recent official reading. DANE reported that consumer prices for food and non-alcoholic beverages fell 0.13% in July, a below-average reading in a month when the country’s overall annual inflation rate eased to 6.03% from 6.14% in June. If Grupo Cibest’s August estimate holds once DANE publishes its own figure, food would go from subtracting from monthly inflation to adding to it within a single month.

Grupo Cibest estimates food prices rose 0.31% in August 2026, reversing DANE’s official -0.13% reading for July. (Chart: DANE; estimates by Grupo Cibest)

Colombia’s food consumer price index went from an official monthly decline in July to an estimated increase in August. (Chart: Finance Colombia, based on DANE and Grupo Cibest data)

Other economists are also revising their outlooks upward because of the earthquake. Citing the risk of supply restrictions, higher demand for emergency relief goods, and damage to transportation infrastructure, Banco de Bogotá‘s economic research team projected monthly inflation of 0.2% in August and 0.3% in September, with the annual rate closing 2026 at 6.8%, according to reporting by Semana. Oxford Economics offered a more measured view, noting that the Colombian peso’s appreciation of nearly 15% during 2026 has been helping offset both El Niño and the earthquake’s impact on food costs, and it expects overall inflation to hold near 6% through year-end.

Beef and beef products carry the single heaviest weight of any food category in Colombia’s consumer price index, at 1.9%, followed by poultry meat at 1.2%, milk at 1.0% and rice at 0.9%, according to the weighting Grupo Cibest published alongside its report. That concentration means price swings in cattle and poultry markets carry an outsized effect on the overall food inflation reading compared with lower-weighted items such as coffee or sugar, even when those categories move by a larger percentage.

Perishable and processed food categories carry different weights in Colombia’s consumer price index, shaping how segment-level swings feed into the headline number. (Chart: DANE)

Beef carries nearly double the CPI weight of the next-largest food category. (Chart: Finance Colombia, based on DANE and Servinformación data prepared by Grupo Cibest)

DANE is expected to publish its official August consumer price index reading in the coming weeks, providing the first confirmation of whether food prices accelerated at the pace Grupo Cibest is projecting. The reading will also feed into deliberations at Banco de la República, Colombia’s central bank, which has been working to bring annual inflation back toward its 3% target from the 6.03% recorded in July.

The magnitude 7.4 earthquake struck on August 10, centered near San José del Palmar, in Chocó, killing at least 111 people on its first day, according to Finance Colombia’s coverage of the disaster, which also drew $1.3 billion USD in international pledges in the weeks that followed, Finance Colombia reported at the time. Colombia’s disaster-management agency, UNGRD, put the toll at 331 deaths, 111 people still missing and 36,326 homes completely destroyed as of a September 7 update — the same day as the Chocó summit — according to Semana.

Officials are calling the new initiative Colombia’s own “Plan Marshall,” a reference to the US-funded program that rebuilt Western Europe after World War II. The goal, De La Espriella’s government said, is not simply to repair what the earthquake destroyed, but to use the reconstruction to close Chocó’s longstanding economic gaps and draw new investment to one of the country’s poorest departments.

“I don’t want 100 small, scattered initiatives, each going its own way, with every ministry announcing its own program,” De La Espriella told the assembled executives, according to Valora Analitik. “We are going to do proper planning, set clear priorities, secure the resources we need and, as a government, I am committing to stay on top of execution so that things actually happen.”

Among the projects announced is the Malecón Gastronómico de Quibdó (Quibdó Gastronomic Waterfront), a new promenade along the Atrato River in the departmental capital meant to revive tourism and commerce there. Chocó Governor Nubia Córdoba said financing for the project is guaranteed through contributions from the business sector, according to El Colombiano. A separate $1 trillion COP infrastructure and connectivity package will fund five road projects to improve Chocó’s links to the rest of the country, split evenly between Colombia’s works-for-taxes program and direct private investment, according to Valora Analitik.

The strategy contemplates new commercialization opportunities for Chocó producers, through direct-purchase mechanisms that will connect local production with large business chains. (Photo courtesy Presidencia de la República)

A $5 billion COP seed-capital fund, channeled through iNNpulsa Colombia with contributions from Colombina (BVC: COLOMBINA), Bancolombia, the banking arm of Grupo Cibest (NYSE: CIB; BVC: CIBEST), and Tecnoglass (NASDAQ: TGLS), is intended to benefit roughly 1,000 entrepreneurs affected by the earthquake, with about $5 million COP going to each business, Commerce Minister Gómez Amín said, according to El Colombiano.

The Ministerio de Comercio, Industria y Turismo (Ministry of Commerce, Industry and Tourism), known in Colombia as MinCIT, is leading several of the measures aimed at accelerating the region’s economic recovery. Nuquí and Bahía Solano, two Pacific coast municipalities in the earthquake-affected zone, were selected for a tourism-development push under what officials are calling a “Pueblos Milagro” strategy, backed by Fontur — the Fondo Nacional de Turismo (National Tourism Fund) — and the Fundación Santo Domingo.

Tourism is one of the strategic sectors of the agenda for Chocó, with the strengthening of tourist destinations such as Nuquí and Bahía Solano, selected among the municipalities in the affected zones that will be supported through Fontur. (Photo courtesy Presidencia de la República)

Companies including Olímpica, Grupo Nutresa (BVC: NUTRESA) and Colombina pledged to buy directly from Chocó producers, aiming to connect them with larger markets, the government said. Separately, officials said they will promote sales of biche, a traditional Pacific-coast spirit made by Chocó producers, through the Central Mayorista de Antioquia wholesale market in Itagüí, near Medellín.

The package also includes financial-inclusion measures, 100 scholarships for young Chocoanos — 50 of them pledged directly by Grupo Nutresa, according to Valora Analitik — solar-power generation for Pacific communities, a special regime meant to formalize small-scale mining, and a special tax and legal regime the government says is designed to attract private investment to the department. Officials also said they will study the feasibility of an interoceanic canal or a rail corridor linking the Urabá region with a deep-water port on Chocó’s Pacific coast.

De La Espriella framed the plan as a long-term commitment rather than a one-time relief effort.

“Chocó was not born to be poor. We are not simply going to rebuild what was lost — we are going to connect the department, attract investment, generate jobs and open opportunities. Government and business are united so that this time, promises become facts.”

— President Abelardo De La Espriella

Commerce, Industry and Tourism Minister Mauricio Gómez Amín said the government wants the reconstruction to leave a lasting economic footprint: “We have a historic opportunity to turn reconstruction into development. The challenge now is to translate these commitments into investment, jobs, new markets and concrete results for the people of Chocó.”

According to Valora Analitik, the business leaders who met with De La Espriella included Alejandro Santo Domingo of Valorem; brothers Jaime and Gabriel Gilinski of Grupo Gilinski; a representative of the Organización Ardila Lülle; David Vélez, founder of Nubank‘s parent, Nu Holdings (NYSE: NU); Bancolombia chief executive Juan Carlos Mora; Fuad Char of Olímpica; Colombina’s César Caicedo; Tecnoglass’s Christian Daes; and Miguel Cortés Kotal of Grupo Bolívar (BVC: GRUBOLIVAR).

Headline photo:Commerce, Industry and Tourism Minister Mauricio Gómez Amín speaks on the Chocó reconstruction plan.

The Colombian peso strengthened 7.5% against the US dollar in July, closing the month at 3,158.44 COP per dollar, a decline of 257 COP from June, according to a report published August 4 by Bancolombia‘s Economic, Industry & Market Research Area. The Medellín-based bank is the flagship banking subsidiary of Grupo Cibest (NYSE: CIB; BVC: PFCIBEST), the group’s holding company, which took on its current name in a 2025 corporate reorganization that renamed the former Bancolombia S.A. parent entity while the banking business itself continued operating under the Bancolombia name. A global sell-off in the US dollar, rising oil prices, optimism over Colombia’s incoming government and heavy dollar sales by local market participants combined to push the exchange rate below the level suggested by its underlying fundamentals, the report said.

During the month, the USDCOP exchange rate fluctuated between 3,086 COP and 3,432 COP. Persistent dollar sales by local participants pushed the Relative Strength Index, a technical momentum gauge, into oversold territory — a reading below 30 — for 19 of July’s trading sessions, with the index ranging between 20.2 and 31.8 over the month.

The Colombian peso strengthened through most of July before paring some of its gains in the final trading session, closing at 3,158.44 COP per dollar. (Chart: SetFx / Bancolombia’s Economic, Industry & Market Research Area)

At the end of July, the Banco de la República (Bank of the Republic, Colombia’s central bank) voted by majority to hold its benchmark interest rate at 12.00%, defying market expectations of a hike of 50 to 75 basis points. The board also launched a program to gradually accumulate up to $4 billion USD in international reserves, the report said. “The persistent appreciation of the Colombian peso provided the majority of Board members with room to pause the policy rate cycle,” Bancolombia’s analysts wrote, even as Colombia’s headline inflation accelerated to 6.14% in June.

The peso’s rally tracked a broader retreat in the US dollar. The DXY index, a benchmark that tracks the currency against a basket of major peers, fell 1.5% in July, allowing most G10 and regional currencies to strengthen against the dollar; the Chilean peso was the only major currency in Bancolombia’s peer comparison to weaken instead. The dollar posted its steepest losses during the final week of July, a decline the report tied to a ceasefire in the Middle East, weaker-than-expected US GDP growth, and the Federal Reserve‘s decision to hold its benchmark rate in a range of 3.50% to 3.75%. The European Central Bank held its own rate at 2.25%, and the Bank of Japan kept its policy rate at 1.0%, its highest level since 1995, amid market expectations that Japanese authorities could intervene to support the yen. Bancolombia’s analysts noted that the US Treasury Department had reportedly told certain financial institutions it could also conduct foreign exchange operations to support the Japanese currency.

Brent crude oil prices climbed 23.5% in July to close at $90.09 USD per barrel, while West Texas Intermediate crude rose 21.8% to $84.67 USD, the report said. Tensions in the Middle East drove much of the increase: Trump declared the ceasefire with Iran over on July 8, and after Houthi militants struck two Saudi oil tankers in the Red Sea on July 23, he threatened a major US military response against Iran and the Houthi movement. Crude prices gave back part of their gains in the final week of the month after the United States suspended airstrikes on Iran and negotiations toward a peace agreement resumed.

Locally, the appreciation was driven mainly by domestic flows rather than foreign investors, according to the report. Colombia’s corporate sector posted net dollar sales of roughly $500 million USD during July, and institutional investors supplied additional dollars in the final weeks of the month. Offshore investors, who had been net sellers of about $500 million USD in the spot and next-day markets in June, shifted to a net-buying position in July. Bancolombia attributed continued interest in Colombia’s carry trade — in which investors borrow in a low-yielding currency to invest in a higher-yielding one — to the policy rate hiking cycle that began in January 2026 and to elevated yields on Colombia’s peso-denominated government bonds, known as TES.

Bancolombia expects the exchange rate to trade between 3,150 COP and 3,350 COP in August, saying some of the local factors behind July’s rally are likely to correct. The bank flagged the central bank’s new reserve-accumulation program as a risk that could push the peso weaker, since additional dollar purchases by the Banco de la República would increase demand for foreign currency. Bancolombia expects markets to keep a favorable bias toward Colombia’s incoming government, though how the new administration handles fiscal consolidation will be crucial to sustaining that view; the report said the incoming administration could introduce a new tax reform proposal and undertake a broad reassessment of the fiscal accounts. Risks tied to carry trade positioning still point toward further peso strength, Bancolombia said, but the central bank’s decision to leave rates unchanged in July could help trigger an upward correction in the exchange rate — meaning a weaker peso — in the weeks ahead.

Above image: The headquarters of the Banco de la República, Colombia’s central bank, in downtown Bogotá. (Photo: Banco de la República handout)

Colombia’s sociopolitical environment is at its most stable point in nearly two years, according to a monthly indicator published by Bancolombia’s macroeconomic research team, part of Grupo Cibest (NYSE: CIB; BVC: CIBEST, PFCIBEST), the financial holding group into which Bancolombia was restructured in 2025. The Sociopolitical Momentum Indicator closed August at 0.50 points, up 0.01 point from July and 0.03 point above its year-to-date average of 0.47, crossing the threshold the bank defines as the boundary between “uncertain” and “fluid” sociopolitical conditions.

Colombia’s Sociopolitical Momentum Indicator rose to 0.50 in August 2026, crossing the threshold Grupo Cibest defines as the boundary between uncertain and fluid conditions. (Data: Grupo Cibest calculations; chart: Finance Colombia)

The indicator has risen 19.6% since the start of the year, Grupo Cibest’s macroeconomic research team said, despite a slight pullback in early August. The bank described the second half of the year’s evolution as the most favorable on record, meaning the seasonal correction the indicator typically shows at the start of the third quarter has this year been steeper than in recent years. Grupo Cibest said momentum has since stagnated, dating from August 19, but that 2026 could still finish as one of the years with the greatest cumulative improvement in Colombia’s local sociopolitical environment — a change in the indicator that the bank said would rank second only to years such as 2007, which was marked by a positive international perception of Colombia and improving domestic security conditions.

Day-to-day, the indicator has held above the 0.5-point “fluid conditions” threshold continuously since August 14, a level that also matched the month’s closing figure. It peaked at 0.51 points on August 17 — the highest daily reading since December 26, 2024, one of the last days in nearly two years the index spent more than a single day in fluid territory, according to Grupo Cibest. The bank said the past two weeks of data point to what could be the start of a more sustained shift toward favorable conditions.

The reading follows a change of government in Bogotá. Abelardo de la Espriella was inaugurated president on August 7, 2026, El Tiempo reported, after he defeated Pacto Histórico’s Iván Cepeda in a June 21, 2026, runoff, beginning a four-year term that de la Espriella has said will prioritize public security. Grupo Cibest’s report does not attribute August’s reading to any single event.

Grupo Cibest builds the indicator using the Global Database of Events, Language, and Tone (GDELT), which monitors media outlets worldwide in real time and automatically classifies the tone and intensity of sociopolitical events affecting Colombia. The bank treats each news item as a distinct event, categorizes it as cooperative or conflictive, and weights it for relevance to Colombia; the daily indicator then measures the share of that sociopolitical activity dominated by uncertainty-related events against total interactions, on a scale where 0 represents fully uncertain conditions and 1 represents fully fluid conditions.

The August report was signed by Manuela Bernal, regional analyst; José Luis Mojica, macroeconomic manager; and Laura Clavijo, chief economist and head, all of Bancolombia’s macroeconomic research department.

Headline photo: A mother and her young son share pastries at breakfast. (Photo: Image by OleksandrPidvalnyi from Pixabay)

Colombia’s national gross domestic product figures obscure significant differences among the country’s departments, according to an analysis by the economic research team at Bancolombia, the banking subsidiary of Grupo Cibest S.A. (NYSE: CIB; BVC: CIBEST, PFCIBEST). Based on 2025 preliminary departmental GDP data and departmental economic activity indicators for the first half of 2026 published by Colombia’s Departamento Administrativo Nacional de Estadística (DANE), the analysis shows that a small number of regions account for most of the country’s output while others remain much more exposed to individual industries and commodity cycles.

“Some departments start from a more favorable position to face a cyclical challenge in their most productive sector.” – Bancolombia’s Economic Research team

Colombia’s economy grew 2.2% year over year in the first quarter of 2026, but the national figure masks a wide range of regional outcomes. Santander led departmental growth at 3.1%, followed by Antioquia at 2.9%, Cundinamarca at 2.7%, Bogotá D.C. at 2.5% and Valle del Cauca at 2.3%, according to the Bancolombia analysis. All five outperformed the national economy.

This regional picture comes as Colombia’s broader growth outlook remains constrained by inflation and fiscal pressures. Grupo Cibest previously cut its full-year 2026 growth forecast to 2.6%, while Bancolombia’s more recent consumption data showed real household consumption growth slowing to 1.2% in the second quarter, its weakest pace in more than a year.

Five of Colombia’s largest regional economies outperformed national GDP growth in the first quarter of 2026. Source: DANE; calculations by Bancolombia / Grupo Cibest.

A small group of departments dominates national output

Bogotá D.C. accounted for 25.4% of Colombia’s national GDP in 2025, according to preliminary DANE figures. Commerce, transportation and lodging, together with financial services, underpin the capital’s economic weight, with Bogotá accounting for roughly half of the country’s financial-sector value added.

Antioquia, whose capital is Medellín, contributed 15.0% of national GDP. Its economy is more diversified, combining manufacturing and agriculture with commerce and services. Valle del Cauca, home to Cali, contributed another 9.8%, with commerce operating alongside a substantial manufacturing base.

Together, Bogotá D.C., Antioquia and Valle del Cauca represented 50.2% of Colombia’s GDP in 2025. DANE independently reports that these three economies accounted for nearly half of national output. Adding Santander, Cundinamarca and Atlántico brings the six largest departmental economies to 67.3% of Colombia’s total GDP.

Bogotá, Antioquia and Valle del Cauca together accounted for 50.2% of Colombia’s 2025 GDP. Source: DANE; calculations by Bancolombia / Grupo Cibest. Chart: Finance Colombia.

That concentration is not simply a reflection of population. It also reflects decades of accumulated infrastructure, specialized labor, financial activity and established production chains. DANE’s departmental GDP series shows Bogotá D.C. and Antioquia as the country’s two largest departmental economies, while Vaupés and Guainía remain at the opposite end of the scale.

A consumption-driven model faces a tougher test

Bancolombia’s researchers caution that the strength of commerce and services in the largest departmental economies does not eliminate concerns about the durability of consumption-led growth.

Household income is likely to face pressure from elevated inflation, interest rates, unemployment and weaker remittance inflows, according to the analysis. Bancolombia’s August consumption report provides a similar signal: real consumption grew 1.2% in the second quarter of 2026, the lowest rate in more than a year, with every major region losing momentum compared with the previous quarter.

That makes the performance of other sectors increasingly important. Bancolombia points specifically to mining and construction as activities with greater potential for a rebound as Colombia’s economic cycle develops.

For the country’s departments, however, the implications are very different depending on their underlying economic structure. A slowdown in household consumption can have a relatively broad impact on diversified economies, while a recovery in commodities can have a disproportionately large effect on regions where mining and hydrocarbons dominate.

Where Colombia’s departments specialize

Bancolombia’s researchers use a location quotient to identify the sectors in which individual departments are unusually specialized. The measure compares the weight of a sector in a department’s economy with that sector’s weight nationally.

A location quotient of 1 means that the sector has approximately the same relative importance locally as it does in Colombia as a whole. A figure above 1 indicates that the sector is more important to that department than it is nationally.

The differences can be striking. Meta recorded a location quotient of 9.0 for mining and quarrying, with the sector accounting for 36.7% of the department’s GDP. Casanare recorded a quotient of 8.1, La Guajira 7.3, Arauca 7.0 and Cesar 6.7.

By contrast, Vichada had a location quotient of 3.8 for agriculture, while San Andrés recorded a quotient of 3.0 for commerce, transportation and lodging.

Mining dominates the economic profiles of several commodity-producing departments, while agriculture and commerce dominate elsewhere. Source: DANE; calculations by Bancolombia / Grupo Cibest. Chart: Finance Colombia.

The concentration of mining and hydrocarbons in departments such as La Guajira, Cesar, Casanare and Meta means their economic performance is more closely connected to international commodity prices and production cycles than that of the country’s largest diversified economies.

That exposure was visible in the first quarter of 2026. Cesar and Meta each recorded a 0.3% year-over-year contraction, while Casanare contracted 2.0%.

The pattern does not necessarily mean that specialization is a permanent disadvantage. Instead, it means that regional performance can change sharply when the economic cycle turns. A recovery in mining, housing and infrastructure investment could disproportionately benefit departments that already have the workforce, companies and physical capacity required to expand those activities.

Bancolombia therefore expects some commodity-dependent regions to have greater room for recovery if those sectors regain momentum. Bolívar and Boyacá, meanwhile, could benefit from a recovery in construction given their relatively high specialization in that activity.

Diversification creates a different kind of resilience

The distinction between specialization and diversification becomes clearer when Bancolombia’s production-concentration coefficient is applied to departmental economies.

The coefficient ranges from 0, representing a highly diversified production structure, to 1, representing an economy concentrated in a single activity.

San Andrés recorded the highest concentration coefficient among the departments examined, at 0.39, followed by Vaupés at 0.30, Vichada at 0.25 and Guainía at 0.21.

At the other end of the scale, Antioquia had the lowest coefficient at 0.04, followed by Boyacá at 0.05, Valle del Cauca at 0.06 and Bogotá D.C. at 0.07.

Antioquia, Boyacá, Valle del Cauca and Bogotá have among Colombia’s most diversified regional economies. Source: DANE; calculations by Bancolombia / Grupo Cibest. Chart: Finance Colombia.

The distinction matters because diversification can provide a degree of protection against shocks concentrated in a single industry. Antioquia, for example, combines manufacturing, agriculture, commerce and services rather than depending overwhelmingly on one commodity or activity.

Commodity specialization can work in the opposite direction. When international prices, production volumes or investment conditions move against a dominant sector, the effects can spread through employment, local demand, government revenues and business investment across the department.

At the same time, a specialized economy can benefit rapidly when conditions turn favorable. Bancolombia’s analysis therefore frames specialization less as a weakness in itself than as a structural characteristic that determines how departments respond to different stages of the economic cycle.

Competitiveness follows a similar geographic pattern

The same concentration appears in Colombia’s competitiveness rankings.

The 2026 edition of the Índice Departamental de Competitividad, produced by the Consejo Privado de Competitividad and Universidad del Rosario, ranks Bogotá D.C., Antioquia and Valle del Cauca among the country’s strongest-performing territories. The index measures 32 departments plus Bogotá D.C. using indicators drawn from official sources.

At the opposite end, Vaupés, Vichada and Guainía rank among the weakest-performing territories.

The competitiveness gap reflects many of the same structural advantages visible in GDP data: infrastructure, human capital, institutions, connectivity and established economic networks tend to reinforce one another over long periods.

These advantages are difficult to reproduce quickly. A department cannot easily replicate in a few years the industrial base, universities, financial institutions, transport infrastructure and supplier networks that have accumulated in Bogotá, Antioquia or Valle del Cauca over decades.

That suggests that regional development policies may be more effective when they build on existing capabilities rather than attempting to create entirely new economic ecosystems from scratch.

Colombia’s regional economy is more uneven than the headline GDP suggests

Taken together, the data present two very different pictures of Colombia’s economy.

The first is a relatively small group of large, diversified departmental economies led by Bogotá D.C., Antioquia and Valle del Cauca. These regions account for roughly half of national output and combine commerce and services with manufacturing, agriculture and other activities.

The second is a much larger group of smaller economies with far greater dependence on individual sectors. In commodity-producing departments, international prices and production cycles can matter more than the trajectory of domestic household consumption. In other regions, agriculture, tourism-linked commerce or public-sector activity can play an outsized role.

That distinction matters for investors, businesses and policymakers because a national growth rate does not tell the whole story. Colombia can record moderate expansion while individual departments simultaneously experience very different combinations of growth, contraction, opportunity and risk.

Bancolombia’s latest NowCast estimated that Colombia’s economy grew 2.7% in the second quarter of 2026. The departmental analysis suggests that understanding where that growth is generated, and which sectors are responsible for it, is just as important as the headline national figure.

For regional policymakers, the implication is equally important: diversification can reduce exposure to individual shocks, but existing specialization can also become an advantage when the economic cycle turns in favor of the sectors in which a department already has deep productive capabilities.

Headline picture : Picture of Cali Colombia Cathedral (Courtesy of Cathey Comm)

Colombia’s economy expanded at an estimated annual pace of 2.7% in the second quarter of 2026, according to the latest reading of the Grupo Cibest NowCast Bancolombia indicator. The figure sits 20 basis points below the rolling quarter ending in May, which the group revised upward by 20 basis points to 2.9%. With the second-quarter estimate in hand, the economy is now judged to have grown 2.4% year-over-year in the first half of the year, a pace the analysts say confirms that activity remains below its potential.

“The economy is estimated to have grown 2.4% year-over-year in the first half, confirming that economic activity remains below its potential.” — Grupo Cibest, Economic, Industry and Market Research (July 2, 2026)

NowCast Bancolombia is a family of proprietary, high-frequency indicators built by Grupo Cibest — the financial holding group that owns Bancolombia (NYSE: CIB) and adopted its current name in May 2025 — from transactions across the group’s payment channels. The indices are designed to complement, not replace, the official statistics published by the Departamento Administrativo Nacional de Estadística (DANE, the National Administrative Department of Statistics), whose figures are available through its website.

For the second quarter, the group revised its NowCast forecast upward by 10 basis points to 2.7%, bringing the projection into line with the market consensus average among analysts. The indicator rose from 2.6% at the end of May to 2.7% at the end of June, matching the 2.7% consensus.

Subdued Growth Across the Board

The monthly readings were more subdued. On a seasonally adjusted basis, the NowCast index contracted 1.2% from the prior month in June. In year-over-year terms against June 2025, growth eased to 1.9%, some 0.5 percentage points below the May reading of 2.4%. Measured as a three-month moving average, year-over-year growth held at 2.7%.

At the sector level, the second quarter showed a divergence between primary and secondary activities. Faster growth appeared in recreation, professional services, agriculture, and manufacturing. The public sector, real estate, communications, trade, and electricity utilities held steady growth rates. Construction activity continued to decelerate, while mining was the only sector to contract by the close of the quarter.

Grupo Cibest’s sector heat map, which tracks year-over-year change on a three-month moving-average basis, put entertainment as the standout in June at 9.7%, followed by financial services at 6.0%, and wholesale and retail trade at 4.0%. Manufacturing reached 3.7% and agriculture 3.5%, both near the top of their recent ranges. At the other end, construction slowed sharply to 0.6% after running above 3% for much of the past year, the information sector managed just 0.2%, and mining slipped to -0.5%.

The report was prepared by Grupo Cibest’s Economic, Industry and Market Research area, led on quantitative work by Arturo Yesid González Peña, the group’s Head of Quantitative & Analytics, with Sebastián Ospina Cuartas serving as data controller. It follows the group’s prior-month estimate, which had pointed to a second-quarter acceleration toward 2.6%.

Above: The construction industry’s growth continued to decelerate as Grupo Cibest reports a 2.7% economic growth for Colombia as a whole in the second quarter. Stock photo by Ncpancy via Pixabay.

The Colombian peso strengthened 115 pesos against the US dollar last week to close at $3,335.46 COP, a 3.35 percent weekly appreciation that Grupo Cibest’s economic research team attributed to a weaker US dollar globally and to a larger-than-expected interest-rate increase at home. In its July 6 weekly report, Radar Bancolombia, the research unit of Bancolombia argued that the currency now trades well below the level its fundamentals would justify.

The Junta Directiva del Banco de la República (the central bank’s board of directors) raised its benchmark policy rate by 75 basis points to 12.00 percent, its highest level since March 2024, surprising a market that had priced in a 50-basis-point move. Even so, the bank argued that a rate consistent with Colombia’s macroeconomic and fiscal conditions should push the exchange rate toward a range between $3,400 and $3,650 COP.

What is moving the peso?

To isolate the drivers of the currency, the research team estimated a structural vector autoregression (SVAR) model that breaks the annual change in the market representative exchange rate (TRM) into international factors, local factors, exchange-rate dynamics and a speculative gap. The exercise found that during 2026 local factors have gained prominence and now explain close to half of the peso’s movements.

In June, Colombia’s sovereign risk premium corrected sharply, reflecting an improved perception of country risk tied to the coming change of administration. The nation’s five-year credit default swaps fell 69 basis points from the first round of the presidential vote — a 29 percent annual decline in June — and now sit about 24 basis points below the level the bank considers consistent with fair value. Among regional peers, Colombia’s policy rate is exceeded only by Brazil’s 14.25 percent, which the bank said keeps carry-trade strategies attractive.

The chart shows how the Colombian peso and the US dollar has detached from the fair value rate of the government. Chart by Finance Colombia.

Measured against where it should trade if it merely tracked its peer currencies and incorporated the deterioration in external fundamentals, the exchange rate should stand near $3,720 COP, Bancolombia estimated. The bank placed the currency’s fair value in a range between $3,710 and $3,880 COP, and noted that the United States economy has shown resilience, backed by technology investment, while inflationary pressures continue to limit the room for maneuver of the US Federal Reserve.

From September 2025, the observed rate detached significantly from that fair value. The bank linked the move first to monetization by the Ministerio de Hacienda (Finance Ministry) — foreign-currency sales of roughly $9 billion USD between September and December, against average daily spot volume of about $1,337 million USD in 2026 — and later to optimism over the change of administration. Those operations drew on a Total Return Swap, new euro-denominated bond issues and a direct placement to Pimco of $23 trillion COP, which raised about $5 billion USD. The gap against peer currencies turned negative after the first-round vote and has since averaged -$225 COP.

The bank described the pattern as a trade electoral — a repricing of Colombian assets in anticipation of a more market-friendly government — that held through much of the second half of 2025 and into 2026, interrupted only when polls showed a wider gap among the presidential candidates.

Bancolombia expects the peso to stay stronger than its fundamentals over the coming months, but not indefinitely. The bank projected the exchange rate in a range between $3,400 and $3,650 COP for the second half of 2026, converging gradually toward fair value in 2027. As long as the local interest-rate cycle keeps favoring long-peso carry positions and optimism persists, the bank said, the peso could reach the lower bound of that range.

“A persistent deviation looks unlikely, since over the long run the exchange rate has not structurally departed from the level observed in its peers.” — Grupo Cibest economic research, Radar Bancolombia

On the external side, the bank flagged persistent pressure toward depreciation from falling international oil prices and limited room for further US dollar weakness. Brent crude, which rose 5.8 percent year over year in the first quarter and 51.2 percent in the second amid the Middle East conflict, had already fallen 26 percent from a peak near $118 USD per barrel to around $72 USD. The bank cautioned that sustaining the currency’s current strength would depend on credible fiscal consolidation, given challenges related to inflation, the El Niño phenomenon, weak investment, the health system, security conditions and the lag in strategic sectors such as mining, energy and construction.

International backdrop

The US unemployment rate fell 0.1 percentage point to 4.2 percent in June, its lowest in a year, the Bureau of Labor Statistics reported, though the economy added just 57,000 jobs, below the 114,000 analysts expected. Hiring concentrated in professional services, up 36,000, social assistance, up 25,000, and health, up 22,000, while lodging shed 61,000. The labor participation rate fell 0.3 percentage point to 61.5 percent, its lowest since March 2021, as 720,000 people left the labor force.

Eurozone inflation eased 0.4 percentage point to 2.8 percent in June, a three-month low and below the 3.0 percent consensus, though still a fourth month above the European Central Bank’s 2 percent target. Core inflation fell to 2.4 percent. In China, the composite purchasing managers’ index rose to 50.6, above the 50 threshold that separates expansion from contraction, with manufacturing at 50.3 and non-manufacturing at 50.2, while construction stayed in contraction.

Colombia’s economy

The Banco de la República resumed its tightening cycle, lifting the policy rate to its highest level since March 2024. Bancolombia expects a further 75-basis-point increase, to 12.75 percent, as inflation expectations drift higher. Consumer inflation was set to rise for a fourth straight month in June, to about 6.13 percent annually and its highest reading since July 2024, on the bank’s estimate of a 0.38 percent monthly gain; analysts polled by the central bank had expected 0.32 percent. Analysts see inflation ending 2026 near 6.52 percent, against the bank’s own 6.4 percent scenario.

Colombia’s national unemployment rate stood at 8.0 percent in May, down 1.04 percentage points from a year earlier and a record low for the month, according to the national statistics department (DANE). Informality was 54.2 percent, and the bank maintained its 9.0 percent urban unemployment projection for 2026. Business sentiment moved the other way: Fedesarrollo’s commercial confidence index fell to 20.5 points and its industrial confidence index to -2.9 points in May, which the bank tied to uncertainty around the presidential election.

Goods exports likely extended double-digit growth in May, to an estimated $5.46 billion USD FOB, up 25 percent year over year, led by non-traditional products — non-monetary gold, copper ores and flowers — and by oil sales at an average price near $107 USD. The bank noted a 37 percent accumulated drop in the first quarter and expected exports to stabilize following the normalization of the tariff dispute with Ecuador.

Fixed income and yields

The US Treasury curve steepened bearishly, with short-dated yields up about 8 basis points and long-dated yields up about 11, after Iran’s foreign minister said no direct US-Iran meetings were scheduled and after US Federal Reserve chair Kevin Warsh, speaking at the European Central Bank’s Sintra forum, reiterated the central bank’s commitment to its 2 percent inflation target. Citi’s economic surprise index held in positive territory for a sixth consecutive month at 57.8. Advanced-economy 10-year yields were mixed over the month, with Japan up 10 basis points and France up 3, against declines of 12 in Germany and the eurozone and 11 in the United Kingdom.

Colombia’s fixed-rate TES curve rallied, with yields down 22 basis points at the short end, 23 in the middle and 9 at the long end, supported by calmer Middle East conditions, the fall in the country’s five-year CDS to levels last seen in 2021, and announcements from the incoming government — among them, the report said, the naming of Miguel Gómez as finance minister. The cash balance of the Dirección del Tesoro Nacional (National Treasury) rose to an average of $20.7 trillion COP in June, up $5.6 trillion from May, or 1.16 percent of GDP. Tax collection grew 7.4 percent year over year in May, to $35.1 trillion COP, led by income tax at $15.3 trillion COP and internal value-added tax at $11.8 trillion COP, according to the tax authority (DIAN).

Commodities and equities

Gold rose to about $4,112 USD per ounce after the US jobs report, while Brent crude closed at $71.94 USD per barrel and West Texas Intermediate at $68.69 USD, little changed on the week as traffic through the Strait of Hormuz recovered and the Organization of the Petroleum Exporting Countries prepared to announce a production increase at its July 5 meeting.

The COLCAP index closed the week up 0.4 percent at 2,295.7 points. The biggest gainers were Cementos Argos (BVC: CEMARGOS, PFCEMARGOS), up 3.5 and 3.1 percent, and Grupo Cibest (NYSE: CIB; BVC: CIBEST), up 3.1 percent, while Davivienda (BVC: PFDAVVNDA), the PEI real estate vehicle and Grupo Nutresa (BVC: NUTRESA) led the declines. Grupo Nutresa launched a share-repurchase offer for up to 3,333,333 shares at $300,000 COP each, with an acceptance deadline of July 3. Davivienda placed $270.1 billion COP in the sixth tranche of its twelfth ordinary bond issuance, drawing offers of $343.99 billion COP.

The figure shows the change in the Colombian peso and how local and international factors seem to be affecting it in a negative direction. Chart created by Finance Colombia.

On Wall Street, the S&P 500 rose 1.8 percent, the Dow Jones 2.0 percent and the Nasdaq 2.1 percent, their best quarter in six years, led by semiconductor and artificial-intelligence infrastructure shares even as investors questioned the sustainability of those valuations. Tesla (NASDAQ: TSLA) lifted deliveries 25 percent year over year in the second quarter, and Lime (NASDAQ: LIME), the shared electric-bike and scooter operator, debuted on the Nasdaq with a $167 million USD raise and a valuation near $1.6 billion USD.

European indices advanced, with the Stoxx 600 up 2.7 percent, the DAX 4.5 percent, the CAC 40 1.5 percent, the FTSE 100 1.6 percent and the IBEX 35 2.2 percent, led by defense shares and with Siemens (XETRA: SIE) contributing to the DAX. KNDS postponed a planned Frankfurt and Paris listing, while Renk (XETRA: R3NK) agreed to acquire Britain’s David Brown Defence for about $200 million USD. In Asia, the Hang Seng rose 3.0 percent, the Nikkei 225 0.6 percent and the Shanghai Composite 0.4 percent; China Resources New Energy staged Asia’s largest listing so far in 2026, raising about $3,600 million USD in Shenzhen.

The full report, Fortaleza del peso colombiano bajo la lupa: entre el optimismo y sus fundamentales, was published by Grupo Cibest’s Dirección de Investigaciones Económicas, Sectoriales y de Mercado, led by Laura Clavijo.

Headline image description: The chart shows how the Colombian peso has depreciated significantly in comparison to other similar currencies in the market by a margin of 500 points. Chart created by Finance Colombia.