Guatemala Inflation


Inflation reaches lowest level in over two years but Central Bank holds rates

In July, consumer prices rose 0.35% over the previous month, which almost tripled the 0.12% increase recorded in June. According to the National Statistics Institute, the monthly figure reflected how lower housing prices more than offset by higher prices across the remaining categories. Annual inflation fell from 3.5% in June to 2.9% in July, which marks the lowest rate since February 2010. Moreover, the core inflation index added 0.32% over the previous month (June: +0.27% month-on-month), driving the annual core inflation to 3.4%, which is down from 3.7% in June. At its 25 July meeting, the Central Bank decided to maintain the policy interest rate unchanged at 5.00%, after the Bank had increased the main interest rate at the previous month's meeting. In its statement, the Bank argued that although uncertainty in the international financial markets persists, global economic growth prospects have not changed significantly. On the domestic front, officials reckon that economic growth remains in line with the Central Bank's projections, while inflation is well anchored within the Central Bank's target range. The Central Bank set an inflation target range of 4.5% +/- 1.0% for this year. For 2013, monetary officials have set an inflation target range of 4.0% +/- 1.0%.

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