Consumer prices in Colombia have contracted in the last month

Consumer prices in Colombia fell by 0.13% in October, a figure significantly below market expectations.

The delation was driven by food costs, the sector with the largest impact on the indicator, the National Department of Statistics (DANE) reported at the end of the week.

The October variation compares to a 0.25% increase in October of the previous year and a 0.24% rise in September.

According to the median of a Reuters survey, the market had anticipated a 0.15% increase in consumer prices for October.

The deflation in October was primarily due to a 0.76% drop in food prices.

Other declines were seen in the prices of recreation and culture (-0.17%) and in the information and communication sector (-0.16%).

In contrast, alcohol and tobacco prices rose by 0.21%, and health prices increased by 0.17%.

From January to October, Colombia’s fourth-largest economy in Latin America recorded a cumulative inflation of 4.44%, compared to 8.27% in the same period of 2023.

Over the past 12 months up to October, the inflation rate stood at 5.41%, down from 5.81% in September, although still above the Central Bank’s target of 3%.

The drop in inflation was the primary reason the Central Bank lowered its benchmark interest rate by 50 basis points to 9.75% in its late October meeting.

The Central Bank’s technical team also revised its inflation forecast for this year down to 5.3%, from a previous estimate of 5.7%.