Costa Rica Ends 2023 With the Lowest Inflation Rate in Central America

El Salvador Ends With the Second Lowest Inflation Rate

By Eddie Galdamez  |  Jan 23rd, 2024
Inflation rate in Central AmericaSan Jose Costa Rica.

The Economic Commission for Latin America and the Caribbean (ECLAC), Costa Rica, ended 2023 with a -1.77% inflation rate, the lowest in Central America. El Salvador was second with a 1.23% inflation rate.

Panama was third with 1.5%, followed by Guatemala with 4.18%, Honduras with 5.19%, and Nicaragua with a 5.6% inflation rate.

At the close of 2023, Costa Rica stood as the sole Central American country to record a general decline in prices, indicating a state of deflation.

Central America Inflation Rate
Country 2022 2023
Costa Rica 7.88 -1.77
El Salvador 7.32 1.23
Panama 2.9 1.5
Guatemala 9.2 4.18
Honduras 9.80 5.19
Nicaragua 11.59 5.6

SEE ALSO: Cost of Living in El Salvador. How expensive is it to live in El Salvador?

Projections for the current year suggest that if geopolitical tensions persist along with increases in food and fuel prices, the inflation rate in Central America may rise.

Inflation in Latin America

Argentina concluded 2023 with a staggering year-on-year inflation rate of 211.4%, marking the highest recorded figure since the hyperinflation period of 1989-1990, following a previous peak of 94.8% in 2022. Argentina is one of the largest economies in the region.

Venezuela ended 2023 with an inflation rate of 189.8%, which represents a decrease of 44.2 points compared to 2022, when it reached 234%.

SEE ALSO: El Salvador’s Inflation Rate

Some of the major Latin American economies registered a downtrend at the end of 2023.

The economic giant in Latin America, Brazil, ended 2023 with an inflation rate of 4.62%, the lowest in three years.

After reaching 12.8% in 2022, Chile managed to reduce inflation to 3.9% at the end of 2023; this is one of the most notable inflation reductions in the region.

Mexico joined the inflation downtrend by closing 2023 with 4.66% after reaching 7.82% in 2022.

The Economic Commission for Latin America and the Caribbean (ECLAC) anticipates a further decline in Latin America in 2024, projecting a median regional inflation rate of 3.2%. However, the economies of Argentina and Venezuela are expected to register much higher figures than the projected regional inflation rate.