Economy: How to Explain Price Escalation?

  • Thursday, June 10, 2021
Fifteen months after the beginning of the health and economic crisis, Guatemala, Honduras and Nicaragua are the economies in the region with the highest inflation rates, a behavior that was influenced by increases in fuel and transportation costs.
In the second quarter of 2020, a period in which the countries of the region were going through a severe economic crisis caused by the Covid-19 outbreak, inflation levels were low and in some economies negative variations were reported.

Check out the "System for monitoring markets and the economic situation in Central American countries", prepared by CentralAmericaData.

One year later, the story changed and countries such as Guatemala have reported inflation rates close to 6%.

The most recent report of the National Institute of Statistics details that in May 2021 in the Guatemalan economy the Consumer Price Index (CPI) reported a 5.17% year-on-year variation (1.8% in the same month of 2020), a rise that is similar to those reported in February and March of this year, which were 6% and 5.84%, respectively. The spending divisions that have influenced this increase in inflation are transportation, housing and restaurants.

In Honduras during the fifth month of 2021, a 4.84% year-on-year inflation was reported (2.3% in the same month of 2020), with transportation being the item that contributed the most to this increase. According to the report of the Central Bank of Honduras, the transportation index registered a monthly variation of 0.80%, reflecting the increases in the prices of fuels for vehicle use (gasoline and diesel) and international air tickets.

In Nicaragua in May 2021, year-on-year inflation stood at 3.97% (2.9% in the same month of 2020). According to the official report, this result was mainly explained by the upward behavior of prices in some goods and services in the Transport, Communications, and Miscellaneous Goods and Services divisions.

In El Salvador during April a 2.79% year-on-year inflation was reported, in Panama in the fourth month of the year inflation was 1.8% and in Costa Rica in May the inflationary rhythm rose to 1.34%.

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