Colombia's Inflation Trends: A Balancing Act of Costs and Rates

Colombia's inflation decelerated in April due to reduced food and housing costs. Despite this, forecasts for year-end inflation rose. A recent interest rate cut by the central bank accompanies predictions of missed inflation targets. Analysts expect inflation to align with targets in the coming years, amid currency and gas price challenges.

April saw a slowdown in Colombia's inflation, continuing a trend from March, primarily driven by decreased food and housing-related service prices, according to a recent Reuters poll.

The 0.48% rise in inflation is anticipated, a decrease from March's 0.52%, with estimates fluctuating between 0.33% and 0.55%. In April, the annual inflation rate might reach 4.97%, exceeding the central bank's 3% goal, influenced by service disinflation.

The exchange rate devaluation and gas price hikes contribute to upward pressure on tradable goods. Despite favorable trends, the central bank's unexpected interest rate cut and rising year-end inflation forecasts suggest Colombia may miss its inflation target for the fifth consecutive year.

(With inputs from agencies.)