The ongoing conflict in the Middle East has triggered a severe global supply shock, driving oil prices up by 41% to an average of $95.74 per barrel in 2026. Widespread disruptions along major trade routes like the Strait of Hormuz have also raised international food prices by 5% and fertilizer costs by 10%. Consequently, global inflation is projected to accelerate to 4.7%, up from 4.1% in 2025.
Despite these mounting international pressures, El Salvador is expected to weather the economic storm better than most of its neighbors. According to the International Monetary Fund (IMF), the country will close 2026 with an annual inflation rate of 2.7%. Although this reflects a notable pickup from 0.3% in 2025, it places El Salvador with the second-lowest inflation rate in Central America, trailing only Panama’s projected 1.8%.
Across the rest of the region, where average inflation is set to rise to 3%, neighboring economies face significantly steeper cost surges. Honduras and the Dominican Republic lead the regional price hikes at 5.6% and 5.1% respectively, while Nicaragua is forecast at 3.5% and Guatemala at 3%. Costa Rica stands as an outlier with an anticipated deflation rate of -0.8%.
Even with this relative macroeconomic stability, Salvadoran households are feeling the squeeze on daily essential items. Linked directly to higher energy and transportation tariffs, the price of the urban basic food basket hit $264.73 in August—reaching its second-highest cost recorded in 25 years.