Inflation is falling more and more slowly around the world; why is Colombia still above the average?

Inflation in Colombia remains one of the main economic concerns in 2025. According to Banco de Bogotá's global inflation report, the country recorded an inflation rate of 5.2 percent in January, remaining stable compared to December 2024.

Although inflation has dropped significantly from the 8.4 percent levels recorded in January 2024, it remains one of the highest in the region and doubles the target of the Banco de la República, which has generated challenges for both the government and consumers.

The report highlights that the inflationary trend in Colombia has shown a slowdown in the last 12 months, with a reduction of 3.1 percentage points.

However, the stability in January suggests, according to the analysis, that the disinflation process could be encountering obstacles. Among the factors that have influenced the evolution of inflation are listed: the volatility of the Colombian peso, food prices and the behavior of fuels.

In the regional context, Colombia continues to have inflation above the Latin American average, which in January stood at 4.1 percent. Meanwhile, Mexico and Brazil showed significant declines in their inflation rates, with reductions of 0.6 and 0.3 percentage points, respectively.

On the other hand, Chile experienced an increase of 0.4 percentage points , reaching an inflation of 4.9 percent.

This mixed performance in the region reflects the diversity of economic policies adopted by different countries. “ While some nations have managed to control price increases through strict fiscal and monetary measures , others have faced difficulties due to internal and external factors, such as political instability and international pressures on commodity prices,” the document states .

Globally, the report indicates that inflation remained stable in January 2025 at 3.1 percent with notable differences between advanced and emerging economies.

Developed economies saw a slight increase from 2.6 to 2.7 percent, with Japan recording the largest increase (from 3.1 to 3.4 percent). Emerging economies saw a slight decrease from 3.9 to 3.8 percent, with Latin America and other emerging markets showing declines, while emerging Asia (China, India, Philippines, Indonesia, Malaysia) saw a slight increase.

The United States and the Eurozone also recorded increases in their inflation levels. In the United States, inflation rose from 2.9 to 3.0 percent, while in the Eurozone it rose from 2.4 to 2.5 percent. In both cases, the main drivers of inflation have been the services sector and the adjustment in energy prices.

Despite the reduction in inflation in Colombia over the past year, significant challenges remain. One of the main challenges is to ensure that inflation continues to decline without affecting economic growth.

“The Central Bank has maintained a restrictive monetary policy, but the recent stability of inflation could delay future interest rate cuts,” the document explains.

They also point out that factors such as the possible depreciation of the Colombian peso, government fiscal pressures and the impact of climatic phenomena on agricultural production could influence the trajectory of prices in the coming months.

In conclusion, the analysis says that although Colombia has made progress in reducing inflation, the path towards sustained economic stability still faces uncertainties .

"The evolution of inflation in the country will depend not only on domestic policies, but also on global factors that continue to influence price behavior," he said.

The analysis highlights several factors that have affected global inflation:

Fluctuations in oil prices: Although they have shown some stability in recent months, crude oil prices continue to be a determining factor in inflation in several countries, especially those with a high dependence on imported fuels.

Geopolitical conflicts: Uncertainty surrounding the war between Russia and Ukraine has generated volatility in energy and raw materials markets, affecting inflation in several economies.

Seasonal effects and domestic factors: In some countries, inflation has been affected by seasonal events, such as the Lunar New Year in China, which has driven up prices. In Japan, the de-anchoring of inflation from the Bank of Japan's target has led to a tightening of monetary policy.

Central bank expectations: Central banks have generally maintained restrictive monetary policies to contain inflation. In advanced economies, inflation is expected to converge to 2.1 percent by the end of 2026, while in emerging economies a sharper decline is expected, with inflation projected at 2.9 percent.