Economy: How to Explain Price Escalation?

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.

Thursday, June 10, 2021

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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More on this topic

Guatemala: Inflationary Rhythm Declines up to May 2019

June 2019

After recording a 4.8% year-on-year variation in the CPI in April, the inflation rate dropped to 4.5% in May.

Monthly inflation (0.26%), shows a slowdown compared to May of the previous year (0.47%), while the accumulated (2.33%), and year-on-year (4.54%), show an acceleration compared to the same month last year, according to the report of the National Statistics Institute.

Dominican Republic Ends the Year with Slight Inflation

January 2019

Up to December last year, the year-on-year variation of the Consumer Price Index was just 1.2%, a behavior that is explained by the fall in fuel prices.

The results of the general CPI, by groups of goods and services in December 2018, show reductions in Transport (-1.80%) and Housing (-1.45%), influenced by the reduction in prices of oil derivatives, informed the Central Bank of the Dominican Republic.

Honduras: 3.9% YoY Inflation up to May 2018

June 2018

The consumer price index registered a monthly variation of 0.10%, due to an increase in the prices of accommodation, water, electricity, gas and other fuels, and transportation.

From a report by the Central Bank of Honduras:

The Consumer Price Index recorded a monthly variation of 0.10% in May 2018, mainly associated with an increase in fuel prices; It should be noted that this behavior was partially offset by a negative variation in the prices of some foods. 

Honduras: 4.2% YoY Inflation in April 2018

May 2018

The consumer price index recorded a monthly variation of 0.22%, due to an increase in the prices of transport and furniture and household items.

From a report by the Central Bank of Honduras:

In April 2018, the Consumer Price Index (CPI) registered a monthly variation of 0.22%, the lowest of the last seven months.  This behavior was influenced by the rise in the price of fuel in the domestic market, as well as some household goods, furniture and appliances.  [GRAFICA caption = "Click to interact with graph"]