Increase in Raw Materials Costs: Which Sectors Will Be Affected?

Salvadoran businessmen expect that at a local level the food, plastics and textile sectors will be the most affected by the increase in the prices of some raw materials and the prices of maritime freight.

Tuesday, April 20, 2021

This phenomenon has been announced for weeks. At the beginning of March, CentralAmericaData reported that due to the imbalance faced by world trade flows, shipping lines have changed their routes and prefer to move empty containers to Asia, a situation that generates shortages and causes increases in freight rates and raw material prices.

This situation is already being felt by businessmen in El Salvador. Jorge Arriaza, executive director of the Asociacion Salvadorena de Industriales (ASI), told that "... the price of commodities (raw materials used by the industry for production) is the main problem facing the reactivation of the sector and this inevitably means a rise in prices to the final consumer."

Arriaza added that "... 'we could not say that there will be an increase in inflation, but there is an increase in prices that may affect the local market to some extent'."
The trade association estimates that some raw materials and freight rates have risen up to 100% this year due to the reactivation of demand, especially in Asia, and that it will be the food, plastics and textile sectors that will suffer the strongest impact in the increase of their production costs in the coming months, the publication points out.

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