Inflation in El Salvador was the lowest in the region in 2023
Table of Contents
Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.
Costa Rica was the only one to report a general price drop (deflation) in December 2023.
Semca report examines inflation in El Salvador and the region
Inflation in El Salvador was the lowest in the region at the end of 2023. This is according to the latest report recently published by the Executive Secretariat of the Central American Monetary Council (Secmca ).
The report, which includes information from central banks in the region and the Institute of Statistics and Census of Panama, shows that by December 2023, inflation in El Salvador was approximately 1.23%.
Panama is second with 1.92%, and the Dominican Republic is third with 3.57%.
The Secretariat points out that Guatemala closed with an interannual inflation rate of 4.18%, while the highest levels were reported by Honduras and Nicaragua, with 5.19% and 5.60%, respectively.
In contrast to modest inflation in El Salvador, Costa Rica was the only country in the region to close in 2023, with deflation at -1.77%. This figure represents a drop in prices.
The Executive Secretariat of the Central American Monetary Council indicates that as of December 2023, inflation in Central America and the Caribbean as a whole stood at 2.84%.
The institution confirmed an average deceleration “mainly evident in the economies of El Salvador, Nicaragua, and Costa Rica.”
Impacted sectors
Although in 2023, high levels of inflation worldwide impacted countries throughout the region, not all economic sectors were affected similarly.
Regarding inflation in El Salvador, for example, the hotel and restaurant sector maintained the highest price increase compared to other services, with an inflation of 5.82%.
In the case of Guatemala, the highest level of inflation was reported in the hotel and restaurant sector, along with food and non-alcoholic beverages, with 8.67% and 8.48%, respectively.
Despite reporting a general reduction in prices, the service of accommodation, water, electricity, gas, and other fuels showed an increase in price in Costa Rica of 4.54%. Panama also had the most significant increase in this area, with 9.96%.
In Honduras, the most significant price increases fell on education and health services, while in Nicaragua, it was the alcoholic beverages and tobacco sector that was most affected. In the Dominican Republic, hotel and restaurant services and various goods and services showed the most aggressive price increases.
Items such as accommodation and water, furniture and household items, transportation, communication, recreation, and culture reported a price drop at the end of 2023 in El Salvador.
Additionally, in Guatemala, Costa Rica, Nicaragua, Panama, and the Dominican Republic, at least one sector was reported where deflation occurred. Only Honduras maintained inflation in all services and items covered by its Consumer Price Index (CPI).
The Secmca document also updated the projections and goals for 2024. According to the institution, inflation in El Salvador could be between 2.2% and 0.2%, while in Costa Rica, it would be between 3% and 1%.
Guatemala and the Dominican Republic could report inflation between 4% and 1%, while Honduras’ projections are between 4.5% and 0.5%. In the case of Nicaragua, inflation levels would be between 3.5% and 0.5%.
The Secmca did not publish a projection for Panama’s case.
Inflation in the region
Lower levels
Inflation in El Salvador and Panama was reported at a level below 2%, with a rate of 1.23% and 1.92%, respectively.
Price Drop
The countries in the region reported at least one sector in which there was a drop in prices as of December, except for Honduras.
Higher inflation
Nicaragua has the highest inflation in the region, and the most affected sector as of December 2023 was alcoholic beverages and tobacco.
In 2023, El Salvador maintained the lowest inflation in Central America at 1.23%, according to a report by the Executive Secretariat of the Central American Monetary Council (Secmca). Panama followed with 1.92%, while Costa Rica reported deflation at -1.77%. The regional average inflation stood at 2.84% by December 2023. Inflation in Salvador had varying impacts on economic sectors, with the hotel and restaurant sector facing the highest inflation at 5.82%. Guatemala’s highest inflation was in the hotel and restaurant sector (8.67%) and food and non-alcoholic beverages (8.48%). Despite general deflation, Costa Rica saw an increase of 4.54% in accommodation, water, electricity, gas, and other fuels. Honduras and Nicaragua reported higher inflation levels, with Honduras focusing on education and health services and Nicaragua on alcoholic beverages and tobacco. The report also outlined inflation projections for 2024 across the region, with El Salvador and Panama expecting levels below 2% and Nicaragua experiencing the highest inflation.
Contact Us
Please use this form to contact us and we will respond as soon as possible: