Guatemala Inflation


Guatemala: Inflation jumps in October

October 8, 2010

In October, consumer prices rose 0.53% over the previous month, which almost doubled the 0.29% increase observed in September. The monthly price spike mainly reflected higher prices for food and beverages as a result of the natural disasters that hit the country in recent months. Owing to the pronounced price increase, annual headline inflation jumped from 3.8% in September to 4.5% in October, which marks the highest rate since March 2009. The core inflation index, which strips out more volatile items of the consumer price index, added 0.11% over the previous month. As a result, annual core inflation rose from 3.3% in September to 3.5% in October. Amid signs of a recovery in the global economy and subdued inflationary pressures, the Central Bank decided to keep its reference rate unchanged at the record-low of 4.50% at the latest monetary policy meeting on 27 October. The Bank stated that the economy continues to recover, as reflected in the development of the monthly index of economic activity. Furthermore, monetary officials indicated that future adjustments in policy rate hinge on macroeconomic developments determining inflation pressures. The next policy meeting is scheduled for 24 November. Consensus Forecast panellists see inflation closing at 4.9% by the end of the year, which is unchanged from last month's estimate. Next year, Consensus Forecast participants estimate inflation to reach 5.6%.

Author:, Senior Economist

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