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.
At the end of last year, the Consumer Price Index in the country reported a 6.1% year-on-year variation, an inflationary rhythm that is higher than the 3.9% registered in December 2018.
After not publishing for several months the information on the behavior of prices in the country, the Central Bank of Nicaragua (BCN) decided to report that in December 2019 the annual inflation was 6.1%.
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.
In May, the CPI rose 6%, reinforcing the upward trend that has been reported since February.
In February, the indicator stood at 3.3%, in March it was 5.1% and in April, 5.8%. The May figure reinforces the upward trend that is likely to continue for the rest of the year.
The Consumer Price Index (CPI) for May showed a 0.77% monthly increase (0.55% in May 2018), mainly because of the behavior of prices in some goods and services of the Food and non-alcoholic beverages divisions (1.12%), informed the Central Bank of Nicaragua.
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).
During the fourth month of the year, the CPI recorded a monthly variation of 0.24%, mainly explained by prices in the sectors of Transport and Recreation and culture.
From a report by the Central Bank of Nicaragua:
The Consumer Price Index (CPI) showed an increase of 0.24 percent (0.32% in April 2017), explained mainly by the behavior of prices in some goods and services in divisions of Transportation (1.86%); Recreation and culture (1.75%); and Restaurants and hotels (0.23%), which together contributed 0.231 percentage points to the variation observed. In contrast, the Food and non-alcoholic beverages division showed a decrease of -0.17 percent (-0.059pp). [GRAFICA caption = "Click to interact with graphs"]
In April, the consumer price index showed a variation of 0.39%, reflecting an increase in prices of food, beverages, restaurants, hotels and transportation.
The reported inflation was greater by 0.77% than the amount of inlfation in the same period in 2014, which was 4.90%. Moreover, the division of Food and Non-Alcoholic Beverages was the largest contributor to inflation in April, with 0.266%, while the division of hotels and restaurants contributed 0.07% to monthly inflation.
Macroeconomic instability and lack of certainty over the variables that affect the production and marketing of goods and services, make it crucial to have excellent cost control.
An analysis on the subject is provided by Otto Stecher, Director of Business Outsourcing Services at Deloitte, detailing the particular situation of Costa Rica's economy and its impact on business, which can be extrapolated to any company in the region.
The inter-annual inflation rate is 1.59% higher than February 2011.
The Central Bank of Nicaragua announced that the accumulated inflation rate in the first two months of the year amounted to 1.36% and inter-annual inflation stood at 8.81%, 1.59 percentage points higher than in February 2011.
The increase in the inflation rate in January and February was due to changes in the prices of food, beverages, transportation, education and other assets, according to a report released by the Central Bank of Nicaragua.
Corn shortage is adding to the already existing shortage of bean. Escalating international prices are threatening millions of poor Central Americans.
January global data shows that food prices continue to rise and are already surpassing the 2008 prices.
And while the Central American economies are benefiting in part by the increase, for example by increasing revenues from coffee and sugar exports, they have not secured supply of basic traditional consumer products such as wheat, corn and beans; the basic foods of poor population. The already high prices are worsened by poor harvests due to bad weather.
The Central American countries have defined strategies to confront the rise in prices and possible scarcity of food. In effect it's an emergency plan that will require an investment of about 560 million dollars. The plan and be concentrated on four products: rice, beans, corn and sorghum.
The Central American plan, aimed at encouraging production of basic grains, includes the creation of a regional network for seed production, joint importation of agriculture inputs, an increase in areas under cultivation, improvements in productivity, and financing for producers.