Discounts and offers, increase in the price level generally and the rise in operating costs due to new health and safety protocols are the main threats to the profitability of companies in this new commercial reality.
Given this context of economic and health crisis, which derives from the outbreak of covid-19 at the global level, Ariel Baños, a specialist in price management and founder of Fijaciondeprecios.com, explains what are the main threats that could affect the profitability levels of companies, and details some strategies that could be applied to mitigate the adverse effects.
After the July Consumer Price Index reported a 6.1% year-on-year variation, in August the increase was 6.3%.
In cumulative terms, national inflation stood at 4.03% (1.66% in August 2018), induced by the behavior of prices in the divisions of Alcoholic beverages and tobacco (42.89%), Several goods and services (9.87%), and Food and non-alcoholic beverages (2.81%), with a joint contribution of 2.13%, reported the Central Bank of Nicaragua.
During June, the Consumer Price Index reported a 5.6% year-on-year variation, an inflationary rhythm that is lower than the 6% registered in May.
From the Central Bank of Nicaragua report:
The June Consumer Price Index (CPI) showed a 0.09 percent monthly increase (0.44% in June 2018), mainly explained by the behavior of prices in some goods and services of the Food and non-alcoholic beverages divisions (0.63%); Restaurants and hotels (0.60%); and Diverse goods and services (0.74%); which together contributed 0.333 percentage points to the observed variation. On the other hand, the division of Recreation and culture showed a 4.37 percent decrease, for a negative contribution of 0.167 percentage points.
During the third month of the year, the CPI registered a 1.82% monthly variation, mainly because of the prices of alcoholic beverages and tobacco.
In cumulative terms, domestic inflation was 1.84%, year-on-year inflation was 5.09%, 0.25% higher than in March 2018, while base year-on-year inflation was 5.25% (4.20% in March 2018), reported the Central Bank of Nicaragua (BCN).
After the country's Consumer Price Index rose to 3.3% in February 2019, it increased to 5.1% in March.
The March Consumer Price Index (CPI) showed a monthly increase of 1.82% (0.14% in March 2018), mainly because of the rise in prices of some goods and services of the divisions: Alcoholic beverages and tobacco (31.37%), Miscellaneous goods and services (3.76%), and Food and non-alcoholic beverages (1.62%), which together contributed 1.176 percentage points to the observed variation, reported the Central Bank of Nicaragua (BCN).
Education and transportation services were the main spending divisions that during the second month of the year caused the variation of the Consumer Price Index in the country.
The Consumer Price Index (CPI) for February showed a 0.27 percent monthly increase (0.22% in February 2018), mainly because of the behavior of prices in some goods and services of the divisions of Education (3.86%), Transportation (1.35%), Furniture and household goods and their conservation (0.67%), which together contributed 0.388 percentage points to the observed variation, explains a report from the Central Bank of Nicaragua (BCN).
After reaching the highest level this year with 5.6% in June, the price index reported a variation of 5.2% in August compared to the same month in 2017.
The Consumer Price Index (CPI) showed a decrease of 0.24% (-0.03% in August 2017), explained mainly by the behavior of prices in some goods and services in the divisions of Food and non-alcoholic beverages (- 0.75%), Recreation and culture (-3.88%) and Communications (-0.06%), which together contributed -0.4 percentage points to the observed variation, reported the Central Bank of Nicaragua (BCN).
In June, the consumer price indexes in all of the countries in the Central American region recorded year-on-year increases in the transport spending division.
According to a report from the Central American Monetary Council, in June of this year, Nicaragua was the country that reported the highest year-on-year increase in the price level of transportation services, registering an increase of 9.8% compared to the same month in 2018.
During the third month of the year, the CPI recorded a monthly variation of 0.14%, mainly explained by the prices of accommodation, water, electricity and gas, and restaurants and hotels.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed an increase of 0.14 percent (0.12% in March 2017), explained mainly by the behavior of prices in some goods and services in the divisions of Housing, water, electricity, gas and other fuels (0.58%); Restaurants and hotels (0.40%); and Miscellaneous goods and services (0.52%), which together contributed 0.132 percentage points to the variation observed.In contrast, the Food and non-alcoholic beverages division showed a decrease of -0.32 percent (-0.112pp). [GRAFICA caption = "Click to interact with graph"]
During the second month of the year, the CPI recorded a monthly variation of 0.22%, mainly explained by the prices of Education and Health services.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed a monthly variation of 0.22 percent (0.74% in February 2017), explained mainly by the behavior of prices in some goods and services of Education (5.28%), Health (1.12%) and Transportation (0.55%), which together contributed0.415 percentage points to the variation observed.[GRAFICA caption = "Click to interact with graph"]
In January, the CPI registered a monthly variation of 0.31%, mainly explained by the prices of Food and non-alcoholic beverages, and Transport.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed a monthly variation of 0.31 percent (0.61% in January 2017), explained mainly by the behavior of prices in some goods and services in the categories of Food and non-alcoholic beverages (0.70% ); Transportation (1.25%); and Accommodation, water, electricity, gas and other fuels (0.25%), which together contributed 0.360 percentage points to the variation observed.In contrast, the division of Recreation and culture, showed a variation of -4.12 percent (-0.165pp)).[GRAFICA caption = "Click to interact with graph"]
In October of this year, the CPI registered a monthly variation of 0.55%, mainly explained by the prices of food, non-alcoholic beverages and water, electricity, gas and other fuels.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed a monthly variation of 0.55 percent (0.31% in October 2016), mainly explained by the behavior of prices in some goods and services in the category of Food and non-alcoholic beverages (1.17% ); Housing, water, electricity, gas and other fuels (1.18%); and Restaurants and hotels (0.67%), which together contributed 0.583 percentage points to the variation observed.In contrast, the division of Transport, showed a variation of -1.43 percent (-1,09pp).[GRAFICA caption = "Click to interact with graphics"]
In August the monthly variation was almost nil, and inflation accumulated in the first eight months of the year closed at 2.37%.
From a statement issued by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed a monthly variation of -0.03 percent (-0.36% in August 2016), mainly explained by the behavior of prices in some goods and services in the categories of Food and non-alcoholic beverages ( -0.71%); Restaurants and hotels (-0.27%); and Communications (-0.87%), which together contributed -0.298 percentage points to the observed variation.In contrast, the division of Transport, showed a variation of 1.40 percent (1,04pp).[GRAFICA caption = "Click to interact with graphics"]
In July, there was a monthly variation of 0.39%, mainly explained by the behavior of food and non-alcoholic beverages, and also Restaurants and hotels.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed a monthly variation of 0.39% (0.32% in July 2016), mainly due to the performance of prices in some goods and services in the categories of Food and non-alcoholic beverages (0.41% ); Restaurants and hotels (0.48%); and Recreation and culture (1.28%), which together contributed 0.244 percentage points to the variation observed.In contrast, the category of Alcoholic beverages and tobacco, showed a variation of -0.35 percent (-0.004pp).[GRAFICA caption = "Click to interact with graphics"]
In May, there was a monthly variation of 0.13%, mainly due to the behaviour of prices in health care, restaurants and hotels.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed a monthly variation of 0.13 percent (0.57% in May 2016), mainly explained by the behavior of prices in some goods and services in Health (1.58%), Restaurants and Hotels (0.64%) and miscellaneous goods and services (0.69%), which together contributed 0.197 percentage points to the variation observed.In contrast, the Food and non-alcoholic beverages division showed a variation of -0.28 percent (-0.098pp).[GRAFICA caption = "Click to interact with graphics"]