The Monetary Fund anticipates inflation to close above 1.2 per cent in 2023, but far from the record mark of 7.3 per cent reported in 2022.
El Salvador inflation would close by 2 % this year, the third lowest rate in Central America, according to projections from the International Monetary Fund (IMF).
In updating its annual report on the world economy (WEO), published last week, the IMF noted that El Salvador’s inflation at the end of 2024 would be higher compared to 1.2 per cent in 2023.
However, it moves away from the records observed between 2021 and 2022 when it reached 6.1 % and 7.3 %, respectively. By 2025, it anticipates that the inflation rate will reach 1.8 percent.
Like the rest of the region, inflation in El Salvador rose sharply in 2021 as a result of a cocktail of crisis, in which the break-up of international logistics chains influenced. In 2022, the world economy was rocked by the Russian invasion of Ukraine, which shot the price of oil and cereals.
Prior to the covid-19 pandemic, the Salvadoran economy reported deflation (price drop) of -0.009% in 2019 and in 2020, the year of the great crisis, continued at -0.08 %.
Inflation is linked to the cost of living and has mainly affected food, as the basic basket reached record prices for the past two decades.
According to the Central Reserve Bank (BCR), inflation would close this year between 1 % and 1.5 %. In September, it was in0.58 %The lowest rate since January 2021.
How will the region close?
Costa Rica would close this year with the lowest inflation rate in the Central American region, by 0.9%. This would mean a recovery compared to the deflation of -1.8 % reported in 2023, an alert to the Costa Rican economy for the harmful effects of the sustained fall in prices.
Panama would have an inflation of 1.3% at the end of 2024, the second lowest rate in the region and slightly lower than the 1.9 % reported in 2023.
According to the IMF, Nicaragua will show a slowdown in the inflation rate from 11.6 per cent reported in 2022, rising to 5.6 per cent in 2023 and by 2024 it would close by 4.8 per cent. However, it would have the highest inflation in Central America.
Honduras would close this year with an inflation of 4.5 percent, as well as Guatemala with 4 percent.
This article has been translated after first appearing in Diario El Mundo