Guatemala registered an inflation rate of 3.36% in April, which means that, on average, that is the increase in prices of goods and services in the economy, compared to April 2023, according to the Consumer Price Index (CPI). ).
According to the National Institute of Statistics (INE) “in April 2024, the inflation rate of the national index stood at 3.36%. This figure indicates an acceleration in the general price increase, by 0.13 points compared to the previous month’s 3.23%. Furthermore, with respect to the variation observed in April 2023 (8.32%), a slowdown of 4.96 points was recorded,” indicates the official report released today, Tuesday, May 7.
The report indicates that the transportation division registered an incidence of 0.18%, explained by the performance of fuel prices, followed by food with 0.04%; living place; various goods and restaurants, all with 0.02%.
The five products that present the greatest monthly positive impact – increases – were gasoline (0.19%), potatoes (0.05%), whiskey (0.05%), fresh lemons (0.02%) and corn (0.02%).
While those that had a negative -low- monthly impact were onions (-0.06%), fresh tomatoes (-0.06%), chicken eggs (-0.03%), passenger transport by air (-0.01%) and green beans, fresh or chilled (-0.01%).
According to the year-on-year figure, inflation is within the goal projected by the Monetary Board of 4% plus/minus 1% for 2024.
The role of fuels
When reviewing the official CPI reports, during the first four months of this year the transportation division (especially gasoline and diesel prices) has been reported as the one that leads the upward incidents (increases), followed by food .
This is how in January, the transportation division rose 0.07%; in February, 0.15%; in March 0.20% – which is the highest percentage – and in April, 0.18%. For the food division, in January the increase was 0.01%; in February it was negative with -0.04%; in March, 0.07%; and in April, 0.04%.
This means that the inflationary pressures observed in the first quarter in the economy come mainly from both divisions, considering that the National Household Income and Expenditure Survey (Enigh) 2022-2023 provided the new weighting structure of the CPI expenditure divisions. : Food has a weight of 31.5%, which is the highest, and transportation has a weight of 9.6%, which together represents 41.1% of the total expenses included in said CPI.
This also means that any variation in them has a positive or negative impact on inflation each month.
Effect on baskets
On the other hand, and in line with the above, the INE reported that the cost of the basic urban food basket per capita (per person) in April was Q850.51 and that of the basic rural food basket per capita was Q657. 59, in accordance with the new methodology for calculating the cost of food.
“The recent behavior of inflation has been influenced by the general moderation of inflation pressures, derived, to a large extent, from the effect of monetary policy actions between May 2022 and April 2023”
Alvaro Gonzalez Ricci, president of the Banguat
Meanwhile, the acquisition of the expanded urban basket (which includes clothing, housing expenses, education and others, apart from food) was Q2 thousand 58.23 and for the rural area, Q1 thousand 295.45.
These values register certain variations with respect to the beginning of the year, since in January the food cost per person in the urban area was Q846.30 and in the rural area, Q654.3. While the cost of the expanded urban basket of Q2 thousand 48.66 in January and Q2 thousand 58. 23 in April; while in the rural area it was quantified at Q1 thousand 287.49 and Q1 thousand 295.45, respectively, according to the official report.
What the Banguat says
Free Press consulted Álvaro González Ricci, president of the Bank of Guatemala (Banguat) and the Monetary Board (JM) regarding the evolution of inflation in April and provided a general perspective, indicating that in April, inflation was within the determined target range by the monetary authority (4% plus/minus 1%).
“The recent behavior of inflation has been influenced by the general moderation of inflation pressures, derived, to a large extent, from the effect of monetary policy actions between May 2022 and April 2023, from the dissipation of external factors that pressured the prices of imported goods and the reversal of some internal supply shocks.
The above is reflected in the fact that most of the spending divisions that make up the CPI register positive interannual variations, but below the central value of the inflation target, with the two exceptions being: restaurants and accommodation services and food and non-alcoholic beverages.”
Then, with the information observed as of April, the official anticipated that inflation will remain within the target range for the remainder of this year and next year, at a value of 4% in both cases.
Regarding the risks that might affect such forecasts, he stated that “although these projections are subject to risks, they are relatively balanced: on the one hand, the upside risks refer, mainly, to an additional increase in international oil prices. , and that translates into higher internal prices of fuels and other energy products; to an intensification of geopolitical tensions resulting in disruptions in global supply chains and increases in international transportation costs; and due to adverse weather conditions that affect the production of the agricultural sector.”
“In April 2024, the inflation rate of the national index stood at 3.36%. This figure indicates an acceleration in the general increase in prices, by 0.13 points compared to the previous month 3.23%.”
CPI report
He added that the downside risks are mainly associated with the persistence of high levels of geopolitical uncertainty; to the prolongation of restrictive international financial conditions; and to more moderate economic growth prospects for the country’s main trading partners, “factors that, individually or as a whole, might affect economic confidence and the performance of national economic activity, and consequently, reduce inflationary pressures of aggregate demand.
Economic impact
- In the transportation division, a higher cost of fuels – gasoline, diesel and LPG – has a second round effect because it impacts the prices of production and marketing inputs of other goods, including those of the basic food basket.
- For example, diesel is used to distribute food from production centers to collection, marketing and consumption centers. And LPG (liquefied petroleum gas) or propane is a fuel widely consumed in homes for food preparation.
- Guatemala is a clearly importing country of products that are refined in plants, especially from the United States, and takes prices from the Gulf of Mexico as a reference.
- In the case of wheat and yellow corn, they are also imported from other producing countries and are raw materials for the manufacture of flour, concentrates and other uses in Guatemala.
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