Colombia's January inflation hit 1.18% monthly, exceeding historical averages and highlighting the broad impact of the minimum wage increase on the IPC basket. The services component drove the uptick, with an annual variation of 6.33%. This breaks two months of moderation, pushing annual inflation to 5.35%.
January's inflation data shows the minimum wage hike creating widespread effects on prices. At 1.18% monthly, this marks the fourth highest January figure since 2010 and 1.4 times the 2010-2025 historical average. Annually, the rate rose from 5.10% to 5.35%, with 71% of IPC items showing positive variations.
Services were the key driver, posting 1.18% monthly—the second highest for January in 15 years—and lifting annual inflation to 6.33%, the peak since April 2025. Items like eating out, rents, domestic services, and condo fees, which rely heavily on labor, account for much of the pressure. Services excluding rents varied 1.89% monthly, also the second highest in the period.
Minimum wage-sensitive items contributed 59% to the total IPC variation. Moreover, about 60% of the IPC's weight is indexed to past inflation, minimum wage, or both, amplifying and extending the impact. Food rose 1.66% monthly, led by perishables such as meats, tomatoes, potatoes, and milk, with an annual rate of 5.11%.
Regulated items increased 1.34% monthly, due to rises in urban transport and fuels, offset somewhat by lower electricity and water rates, reaching 5.47% annually. Goods saw 0.46% monthly, pushing annual to 2.90%, driven by alcoholic beverages, pharmaceuticals, and cleaning products, despite an 11% peso appreciation.
Core inflation measures indicate persistence: excluding food, 5.41%; excluding food and regulated, 5.39%, the highest since September 2024. In the region, Colombia had the sharpest rebound, unlike Chile's decline and mild rises in Brazil, Mexico, and Peru.
February forecasts suggest 1.22% monthly and 5.4% annual, with services at 7.02%. Meanwhile, the provisional suspension of the 23.78% wage increase decree adds institutional uncertainty, though January data already shows price adjustments. The discussion focuses on indexation and its role in inflation persistence.
