Colombia’s consumer price index (CPI) posted a 0.04% contraction in July as food prices posted a decline, helping offset small increases in health and entertainment costs, the government’s statistics institute, known as DANE, reported Thursday.
The decline in the CPI was not widely expected by analysts. A survey of eight economists by Dow Jones Newswires produced a median estimated increase of 0.11%.
The 0.04% contraction was identical to the inflation figure for July last year. Colombia’s 12 month-running inflation rate stands at 2.24%, the lower range of the central bank’s inflation target of 2% to 4%.
The inflationary decrease last month was mainly due to a 0.5% drop in food prices, which accounts for 28% of the CPI.
The relatively low inflation readings so far this year will allow the central bank to keep its benchmark rate at 3% probably until the end of the year, economists have said.
The low inflation readings are coming in despite signs that economic growth is picking up pace. The central bank lifted on July 23 its economic growth estimate to between 3.5% and 5.5%. (Darcy Crow / Dow Jones)