(MENAFN- The Rio Times) Colombia's plan to return inflation to 3% by 2026 is slipping. Prices rose 5.18% year over year in September-the third straight monthly uptick-driven by rents, food, and restaurant services.

Most forecasts now put inflation near 5% at the end of 2025 and around 4% in 2026, still above target. The story behind the story is how prices get set. Many Colombian contracts and fees are“indexed”-they move with past inflation or wage benchmarks.

Housing is the clearest example: leases typically reset once a year based on the previous year's inflation , so rent keeps rising even after other pressures fade. When indexation is widespread, yesterday's inflation quietly shapes tomorrow's bills.

That's why the annual minimum-wage negotiation matters so much. A double-digit hike would ripple through indexed prices and keep overall inflation sticky.

Local banks' scenarios suggest that if the 2026 minimum wage rises about 9.5%, inflation could end that year near 4.1%; a roughly 12.4% increase would push it closer to 4.7%. A potential tax package that raises consumption taxes would add another layer of pressure.



Policy makers are boxed in. The central bank kept its benchmark rate at 9.25% in early October, signaling caution as inflation expectations drift above target and fiscal risks loom.

Higher-for-longer borrowing costs slow credit and investment, squeeze household budgets, and make it pricier for the government to finance itself-effects that resonate well beyond Colombia's borders.

Why this matters to readers outside the country: Colombia is a test case for post-pandemic inflation persistence in emerging markets.

It shows how indexation, wage policy, and tax choices can outweigh falling import costs or calmer food prices. If Colombia can't get back to 3% soon, it implies tighter financial conditions and slower growth for longer.

What to watch next: the size of the 2026 minimum-wage increase, details of any tax measures, and the next monthly inflation prints to see whether the recent price momentum breaks-or becomes the new normal.

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