Colombia likely experienced a modest slowdown in inflation during May, thanks to easing food prices and a stronger peso, according to a Reuters poll released Wednesday. However, expectations for overall inflation in 2025 have risen, signaling long-term concerns.

A median forecast from 19 economists surveyed by Reuters suggests that monthly inflation rose 0.4% in May—noticeably lower than the 0.66% recorded in April.

“Service-related inflation remained persistent due to ongoing rent indexation and regulated sectors like utilities,” explained Carlos Alberto Velasquez, chief economic analyst at Alianza brokerage. “Still, overall price pressure from food and goods stayed muted, largely helped by the 2.86% appreciation of the peso against the U.S. dollar,” he added.

If the May estimate proves accurate, Colombia’s 12-month inflation rate would settle at 5.12%—still significantly higher than the central bank’s long-term goal of 3%.
Long-Term Inflation Forecasts Climb

While the monthly trend may be improving, analysts now expect inflation to finish 2024 at 4.8%, up from 4.55% in the previous survey—marking what could be the fifth straight year of inflation exceeding the central bank's target.

Forecasts for the end of 2026 have also ticked upward, with inflation expected to close at 3.75%, compared to 3.61% previously, reflecting persistent structural challenges.
Rate Cuts Amid Inflation Concerns

High inflation remains a central issue for the country’s monetary policymakers. It was a major factor behind the Colombian central bank’s decision in April to cut its benchmark interest rate by 25 basis points to 9.25%, a move that surprised market watchers.

Economists are now looking to the May inflation figures, due to be released on June 9, for further insight into whether Colombia’s cooling inflation trend is strong enough to justify additional rate cuts or whether caution will prevail amid rising long-term expectations.