Ecuadorean consumer prices rose the most in five months in August, led by increases in food and alcohol, as government tax increases trickled down to consumers.
President Rafael Correa’s administration increased taxes on some imports, including alcohol and vehicles, in July to reduce capital outflows. It also tightened controls on cash transfers as part of measures to boost liquidity in the nation that uses the U.S. dollar as its official currency. Global food prices jumped 6.2 percent in July, the biggest monthly increase since 2009, according to the UN Food and Agriculture Organization’s world food price index, increasing pressure on processors who import the raw materials.
Prices rose fastest in the coastal city of Esmeraldas, climbing 0.64 percent in August from July, while they were little changed in Guayaquil, the nation’s largest city, the agency said. Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, subsidizes fuel and the domestic use of natural gas.
Producer prices rose 0.58 percent from July and 2.14 percent from August 2011, the agency said.
Consumer prices are forecast to increase an average 5.14 percent this year compared with 4.47 percent in 2011, according to the Finance Ministry’s 2012 budget. The economy may expand 4.8 percent this year, the central bank said in July, less than the 5.35 percent originally estimated in the 2012 budget.