Guatemala Inflation


Inflation remains stable in June

In June, consumer prices rose 0.53% over the previous month, which was above the 0.49% increase observed in May. According to the National Statistics Office, the monthly rise was driven entirely by higher prices for food and non-alcoholic beverages, as fresh produce, which accounts for the bulk of the basic food basket, recorded higher prices on the back of adverse weather conditions. Despite the monthly increase, annual headline inflation remained stable at May's 6.4%, which, nonetheless, represented the highest level since February 2009. The core inflation index, which excludes more volatile categories of the consumer price index, added a more subdued 0.11% over the previous month, driving annual core inflation to 4.7% (May: 4.6% year-on-year). Meanwhile, at its 29 June meeting, the Central Bank decided to leave the policy rate unaltered for a second consecutive month at 4.75%, after monetary authorities raised the rate by 25 basis points in March. In its statement, the Bank argued that short-term economic indicators show favourable conditions for the ongoing recovery, with economic activity and the external sector remaining healthy. In addition, the Bank acknowledged that inflation expectations had been increasing, while also recognising that global commodity prices, in particular those of oil and food, are starting to show some moderation. The Central Bank has an inflation target of 5.0% 1.0% for this year. For 2012, monetary authorities have set an inflation target of 4.5%.

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