Guatemala Inflation


Guatemala: Inflation rises in December

December 8, 2010

In December, consumer prices added 0.08% over the previous month, which was well below the 0.77% increase observed in November. The subdued price rise mainly reflected higher prices for housing as well as for transport and communications, which were partially offset by lower prices for food and non-alcoholic beverages. As a result of the monthly increase, annual headline inflation rose from 5.3% in November to 5.4% in December, which represents the highest rate since February 2009. The core inflation index, which excludes more volatile categories such as fresh food and fuels, added 0.34% over the previous month (November: +0.17% month-on-month), pushing annual core inflation to 3.1% in December from 2.8% in November. Meanwhile, at its latest meeting on 24 November the Central Bank decided to keep its monetary policy rate unchanged at the record low of 4.50%, amid signs of uncertainty in the global economic recovery and subdued inflationary pressures. Monetary officials argued that weak consumption and investment, combined with high fiscal deficits and debt woes in some European countries, may affect sustainable growth in the global economy, pointing to a deceleration this year. In addition, inflationary pressures in the country remain contained, with inflation at the end of 2010 within the Central Bank's target range of 5.0% 1%. The next policy meeting is scheduled for 23 February. The Central Bank expects inflation to close this year at 5.9%. Moreover, monetary officials decided to keep the inflation target at 5.0% 1% for this year and to lower it to 4.5% 1% for 2012.

Author:, Senior Economist

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