Ecuador’s consumer prices rose the most in three years in 2011 as costs of imported food climbed, while wage increases and job creation boosted consumer demand.
Prices climbed 5.41 percent, the most since 2008’s 8.83 percent increase and compared with 3.33 percent in 2010, the National Statistics and Census Institute reported today. Inflation eased from 5.53 percent the month before, the first decline in 11 months.
Prices climbed as costs of imported staple food such as corn rose, while increased spending on public works projects and government employees boosted consumer demand, said Vicente Albornoz, director and head economist of the Cordes research institute in Quito. The 2011 increase was bigger than the 5.3 percent average estimate of four analysts surveyed by Bloomberg.
“First, there is imported inflation,” Albornoz, who predicts prices will increase by about 5 percent this year, said by phone from Quito yesterday. “You’ve also got a lot of money coming into the country that is spent on goods and services and that is generating the local part of inflation.”
Producer prices, which fell 1.48 percent in December from November, climbed 3.1 percent last year, the report said.
Consumer prices rose most in the cities of Ambato and Manta, where they climbed 6.42 percent. In Guayaquil, the Andean nation’s largest city, prices increased 4.68 percent, the agency said.
Inflation in Ecuador, which uses the U.S. dollar as its official currency, is forecast to slow to 5.14 percent this year, while the economy may expand 5.35 percent, according to the Finance Ministry’s 2012 budget.