El Salvador concluded 2024 with the lowest annual inflation rate in Central America, second only to Panama, which experienced deflation. According to the Executive Secretariat of the Central American Monetary Council (Secmca), the region saw a general slowdown in price increases, attributed to the falling costs of raw materials on the international market.
While Panama closed the year with deflation, El Salvador reported an annual inflation rate of just 0.29% in December 2024, the lowest since December 2019. This marked a significant deceleration from the inflationary pressures that began in 2021, driven by global market disruptions due to the COVID-19 pandemic and the Russian invasion of Ukraine.
The Consumer Price Index (CPI) in El Salvador showed deflationary trends between October and November 2024 (-0.07% and -0.31%, respectively), before returning to a positive rate in December. Economists attribute this decline to the reduced prices of key commodities like oil, which, despite fluctuations, have not returned to the highs of over $120 per barrel seen in 2022.
Costa Rica, which experienced deflation starting in July 2023, closed 2024 with a CPI of 0.84%, the second-lowest rate in the region. Guatemala followed with a 1.70% CPI, and Nicaragua recorded a rate of 2.84%, the lowest since November 2020. In contrast, Honduras had the highest inflation rate in Central America at 3.88%, although this was the lowest since February 2021 and significantly lower than the 5.19% recorded in December 2023.
Panama remained the only Central American country to experience negative inflation in 2024, closing the year with a deflation rate of -0.2%. This was after consistent rates below 2% throughout the year, with deflation beginning in September.
El Salvador’s notable economic performance in 2024 reflects broader regional trends towards stabilization, providing a hopeful outlook for continued economic growth in the face of global market fluctuations.