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Guatemala and Honduras earmarked as most under threat from world food prices

Monday, May 2, 2011

Sharp increases in food prices will hit poorer Latin American countries like Bolivia, Dominican Republic, Guatemala and Honduras the hardest, raising their inflation rates by more than 5 percentage points this year.

A report by the Inter-American Development Bank, which focuses on Latin American and the Caribbean issues, said countries hardest hit were those where food makes up a large part of their overall inflation basket and they have limited or no exchange rate flexibility to fall back on.

The report singled out Guatemala as a case for concern since its exchange rate flexibility does not appear to prevent international food prices from passing through to domestic food prices and general inflation.

Original source: Reuters