Ecuador Prices Jump Most Since 2008 on Food, Education Costs

Ecuadorean consumer prices rose the most since 2008 in September, led by increases in food and education costs as students returned to classes, the country’s statistics agency reported today.

Prices in the Andean nation increased 1.12 percent in the month, the biggest jump since April 2008, and rose 5.22 percent from a year earlier, the National Statistics and Census Institute said in a report on its website.

Rising wages and increased public spending, forecast by the government to jump 9 percent in 2012, have boosted demand in South America’s seventh-biggest economy, driving prices higher, said Maria Herrera, an economics professor at the Universidad Catolica in Quito. Above-average rainfall and a volcano eruption this year have also reduced output of food staples such as potatoes and onions, she said.

“It’s demand inflation,” Herrera said yesterday in a telephone interview. “Basically, it’s the government’s increase in public spending that has directly affected wages, which means there’s more demand.”

Prices rose the fastest year-on-year in the coastal city of Manta, jumping 7.01 percent, while inflation was 4.48 percent in the nation’s largest city, Guayaquil, the agency said. Ecuador, a member of the Organization of Petroleum Exporting Countries, subsidizes fuel costs and the domestic use of natural gas.

Producer prices fell 0.28 percent from the previous month and increased 1.72 percent from September 2011, the report said.

Consumer prices are forecast to gain an average 5.14 percent this year compared with 4.47 percent in 2011, according to the Finance Ministry’s 2012 budget. That’s in line with the median increase of 5 percent forecast by six economists in a Sept. 27 survey by Bloomberg. The country’s central bank said in July the economy may expand 4.8 percent this year.

To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net.

To contact the editors responsible for this story: Richard Jarvie at rjarvie@bloomberg.net; Philip Sanders at psanders@bloomberg.net.

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