Guatemala Inflation


Guatemala: Inflation jumps in July

August 8, 2011

In July, consumer prices added 0.95% over the previous month, which was above the 0.53% increase observed in June. According to the National Statistics Office, the monthly rise was mainly driven by higher prices for food and non-alcoholic beverages as well as for housing. As a result of the monthly increase, annual headline inflation rose from 6.4% in June to 7.0% in July, which represented the highest level since January 2009. The core inflation index, which excludes more volatile categories, jumped 0.63% over the previous month, driving annual core inflation to 5.2% (June: 4.7% year-on-year). At its 27 July meeting, the Central Bank decided to lift the monetary policy rate by 25 basis points to 5.00%. The Bank's decision represented the second interest rates hike this year. In March, the Central Bank lifted the policy rate from 4.50% to 4.75%. Monetary authorities stated that short-term economic indicators continued to show favourable conditions for the ongoing recovery, with the external sector and economic activity showing healthy developments. In addition, the Bank reckoned that inflation expectations remain elevated. 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% 1.0%.

Author:, Senior Economist

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