Ecuador: Inflation inches up in October
November 30, 2010
In October, consumer prices increased 0.25% over the previous month, which was virtually in line with the 0.26% increase recorded in September. Higher prices for communications, which rose 0.71% over September, as well as for food and non-alcoholic beverages, which increased 0.58% month-on-month, were the main drivers behind the monthly price rise. As a result of the monthly increase, annual headline inflation inched up from September's 3.4% to 3.5% in October. Despite the rise in inflation, the trend remains stable, with annual average inflation unchanged at September's 3.7%. Ecuador dollarized its economy in 2000 to tackle rampant inflation. Since then, inflation has declined to below the regional average. However, inflation may now rise amid the monetary easing adopted by the U.S. Federal Reserve. The latest round of quantitative easing is likely to weaken the dollar, which drives up the cost of imported goods for Ecuador. The Central Bank expects inflation will reach 3.35% this year, down from 4.3% last year. Consensus Forecast panellists share the Central Bank's assessment and see inflation at 3.3% by year end, which is down 0.1 percentage points from last month's estimate. Next year, participants estimate inflation to reach 3.5%.
Author: Armando Ciccarelli, Head of Data Solutions