El Salvador’s inflation rate is expected to reach 4.5%, according to forecasts by the Central Reserve Bank (BCR).
“Inflation, which has already been falling consecutively for 10 months, will close the year within 3.5% and 4.5%. Very good prospects,” said BCR President Douglas Rodriguez in a television interview.
“In July, the main year-on-year increases were registered in restaurants and hotels (6.69%), followed by food (6.40%) and goods and services (5.13%),” the BCR report showed.
“But that the inflation rate “falls,” as indicated by government sources, does not imply that prices fall and is not entirely encouraging, who assures that the issue is complex, especially in an economy like El Salvador that is dependent on everything and vulnerable to international shocks,” according to the analysis of Melissa Salgado, an economist at the Department of Economics of the José Simeón Caas University (UCA).
“Inflation, which has already been falling consecutively for 10 months, will close the year within 3.5% and 4.5%. Very good prospects,”
Rodriguez, said.
“Indicators of declining inflation do not always mean that it is positive, because it may mean that people are reducing their level of consumption; so, that would be a process of deflation… That would mean a fall in the price system that comes from the impoverishment of the country. If you look at quarterly indicators for El Salvador, it seems that this is going backwards, not forwards,” he told La Prensa Grafica.
The president of the Association of Professionals in Economic Sciences (COLPROCE), scar Cabrera, said that there has been a slowdown in economic growth explained by a fall in private consumption expenditures and especially in household consumption expenditures.
“The sum of all the purchases you make when you go to the market represents 85% of GDP. If your living conditions are being affected, obviously this is going to be reflected in the growth figures of the economy,” he said in a radio interview.
In 2023, the BCR foresees an economic growth rate of 2% to 3%.
Cabrera estimated that from 2024 to 2028, “El Salvador will barely be growing 2.1%, and this is explained by a slowdown in household consumption and also because total investment levels have not managed to take off since the pandemic.”
