The latest Producer Price Index (PPI) YoY for Colombia (CO) released on December 4, 2025, registered a steep decline to -1.45%, a sharp reversal from the 1.80% recorded in November and below the consensus estimate of 1.40%. This data, sourced from the Sigmanomics database, covers the entire Colombian economy’s producer prices on a year-over-year basis, reflecting changes in wholesale prices paid by domestic producers.

Drivers this month

• Commodity price softness amid global demand slowdown
• Weaker domestic industrial output and manufacturing activity
• Supply chain normalization reducing input cost pressures
• Currency appreciation of COP dampening import costs

Policy pulse

The PPI reading now sits well below Colombia’s central bank inflation target range of 2-4%, signaling easing inflationary pressures at the producer level. This may reduce urgency for further monetary tightening, though the central bank remains cautious due to external uncertainties.

Market lens

Immediate reaction: The Colombian peso (COP) strengthened 0.30% against the USD within the first hour post-release, while the benchmark COLCAP index dipped 0.50%, reflecting concerns over industrial sector growth prospects.

The PPI YoY is a critical macroeconomic indicator, often a leading signal for consumer inflation trends and industrial health. Colombia’s PPI has shown a steady downward trajectory since April 2025, when it peaked at 4.88%. The November 2025 reading of 1.80% already indicated cooling price pressures, but the December plunge to -1.45% marks a notable deflationary phase.

Historical comparisons

• April 2025: 4.88% (peak inflationary pressure)
• August 2025: 2.20% (mid-year moderation)
• November 2025: 1.80% (prelude to deflation)

Core inflation and GDP growth have also moderated in recent months, with Q3 2025 GDP growth slowing to 2.10% YoY from 3.50% in Q1. The Consumer Price Index (CPI) YoY for November 2025 was 3.20%, down from 4.10% in July, consistent with the PPI trend. The central bank’s benchmark interest rate currently stands at 7.25%, unchanged since September, reflecting a wait-and-see stance amid mixed signals.

Fiscal policy & government budget

Colombia’s fiscal deficit remains elevated at 5.30% of GDP in 2025, pressured by social spending and infrastructure projects. Lower producer prices may reduce tax revenues from industrial sectors, complicating budgetary balances. The government has signaled no immediate plans for fiscal tightening, focusing instead on growth-supportive measures.

Figure 1: Colombia PPI YoY (%) April 2025 - December 2025 [Graph showing a peak at 4.88% in April, gradual decline to 1.80% in November, sharp drop to -1.45% in December]

Market lens

Immediate reaction: The COLCAP index fell 0.50% post-release, reflecting investor concerns over industrial earnings. The COP/USD pair strengthened 0.30%, indicating market expectations of reduced inflation risk and potential monetary easing.

Looking ahead, Colombia’s PPI trajectory will be shaped by several factors. The base case scenario (60% probability) envisions continued mild deflation or near-zero PPI growth through Q1 2026, as global demand remains subdued and supply chains stabilize. This would support easing inflation but constrain industrial output growth.

The bullish scenario (20% probability) assumes a rebound in commodity prices and domestic demand, pushing PPI back into positive territory above 2% by mid-2026. This would bolster producer margins and fiscal revenues, supporting growth and potentially prompting tighter monetary policy.

The bearish scenario (20% probability) involves deeper deflationary pressures, with PPI falling below -3%, driven by a sharper global slowdown or renewed geopolitical shocks disrupting exports. This would heighten recession risks and force accommodative fiscal and monetary responses.

Monetary policy & financial conditions

The central bank is likely to maintain current rates in the near term, monitoring inflation and growth data closely. Financial conditions have tightened moderately, with 2-year sovereign yields rising to 8.10% amid global rate volatility. The COP’s recent appreciation may limit imported inflation but could hurt export competitiveness.

External shocks & geopolitical risks

Global commodity price volatility, especially in oil and metals, remains a key risk. Geopolitical tensions in Latin America and trade disruptions could further pressure producer prices. The government’s ability to manage fiscal deficits amid these shocks will be critical.

Colombia’s December 2025 PPI YoY reading of -1.45% signals a pivotal moment in the country’s inflation and industrial cycle. While easing producer price pressures may relieve consumer inflation, the sharp decline raises concerns about industrial sector health and fiscal stability. Policymakers face a delicate balance between supporting growth and containing inflation risks amid external uncertainties.

Market participants should watch upcoming PPI releases, central bank communications, and commodity price trends closely. The interplay of monetary policy, fiscal discipline, and external shocks will determine Colombia’s macroeconomic trajectory in 2026.

Key Markets Likely to React to Producer Price Index YoY

The Producer Price Index YoY is a vital gauge of inflationary pressures and industrial health in Colombia. Markets sensitive to inflation trends, currency strength, and commodity prices are expected to react strongly to PPI releases. Key symbols historically correlated with Colombia’s PPI include equities, currency pairs, and commodities linked to industrial activity.

• COLCAP – Colombia’s benchmark equity index, sensitive to industrial and economic growth signals.
• USDCOP – The USD/COP currency pair, reflecting inflation expectations and monetary policy outlook.
• ECOPETROL – Colombia’s largest oil company, impacted by commodity prices and producer cost trends.
• BTCUSD – Bitcoin’s price often reacts to macroeconomic uncertainty and inflation trends globally.
• EURUSD – Euro to USD exchange rate, influencing global risk sentiment and emerging market flows.

FAQs

What is the significance of Colombia’s Producer Price Index YoY?

The PPI YoY measures changes in wholesale prices paid by producers, signaling inflation trends and industrial sector health.

How does the PPI affect Colombia’s monetary policy?

A declining PPI suggests easing inflation pressures, potentially reducing the need for further interest rate hikes by the central bank.

What external factors influence Colombia’s PPI?

Global commodity prices, currency fluctuations, and geopolitical risks significantly impact Colombia’s producer prices.

Key takeaway: Colombia’s sharp PPI decline to -1.45% signals easing inflation but raises risks for industrial growth and fiscal stability, demanding close policy and market attention.

Sources

1. Sigmanomics database, Producer Price Index YoY for Colombia, December 2025 release.
2. Banco de la República de Colombia, Monetary Policy Reports 2025.
3. Colombian National Administrative Department of Statistics (DANE), Inflation and GDP Data 2025.
4. International Monetary Fund, World Economic Outlook, October 2025.
5. Bloomberg Terminal, Market Data and Reactions, December 4, 2025.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.