Services inflation excluding rent reached 9.1% in May, driven by the 23% minimum wage hike. Market expectations for end-2026 rose to 6.5%.
Core inflation rose from 5.3% in December 2025 to 6.1% in May 2026. Total inflation increased from 5.1% to 5.8% over the same period. The 23% minimum wage increase this year, the largest in more than a decade, is pushing business costs toward consumer prices.
Market surveys show inflation expectations for end-2026 rose from 5.2% in December to 6.5% in May. Expectations for the next twelve months moved from 4.6% to 5.7%. Banco de la República aims to keep inflation between 2% and 4%, with a 3% target.
Financial markets expect the central bank to tighten policy. The interest rate expectation for end-2026 increased from 9.25% in December to 12.0% in May. A 10.5% rate is projected for end-2027. The bank's first meeting is scheduled for June 30.
