In three cities in Ecuador, the basic basket exceeds 800 dollars: what is the inflation in each population?

A sustained and general increase in the price level of goods and services in the economy is what is defined as inflation; and The price of basic necessities includes a basic basket, the average price of which at the national level is USD 784.65 until November 2023. Data for December will be known in early 2024.

Both terms determine what the economy is like, and thus the cost of living for Ecuadorians, according to Alonso Marín, a professor at the Business & Digital School in Uiseko, and Larry Yumibanda, president of the Guayaquil Economic Circle.

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“Inflation is a measure that tracks variations in the prices of a representative basket of goods and services consumed by families,” says Marín.

Its calculation is monthly, annual and cumulative, which is concluded in different concepts: moderate, unrestrained, hyperinflation, deflation and disinflation. For Yumibanda, the country is in disinflation.

“The Ecuadorian economy is going through a process of disinflation, but every month to a lesser extent, so the growth of the general price level is decreasing. This is happening fundamentally because the economy is going through a slowdown process,” says Yumibanda.

According to the National Institute of Statistics and Censuses (INEC), monthly inflation was -0.40% as of November 2023 and annual inflation was 1.53%. The annual average in the period 2014-2023 was 1.45%. And in the same range, the monthly average was -0.11%.

And by cities, annual inflation (as of November 2023) does not exceed 3%. In Guayaquil it is 2.33%, compared to November 2022, which was 3.82%.

“The rate reduction shows that prices grew more slowly compared to the previous year. The cumulative increase in prices from January to November 2022 was higher than in the same period in 2023. Prices grew more slowly in 2023,” Marín points out.

Santo Domingo is another city in such a state, but it has higher inflation than Guayaquil, according to INEC data. The indicator is 2.40% for the current period, and in the previous period it was 4.17%. “There is a reduction in the rise of the CPI (consumer price index),” says Marín.

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Manta, Esmeraldas and Quito are in the range of 1% to 2%. The first city has 1.87%, Esmeraldas 1.83% and Quito 1.08%. Yumibanda insists on a disinflation scenario, but is it positive or negative?

Yumibanda explains that this situation benefits people who work and have an income because they can get slightly cheaper products and see more offers on the market. The negative thing, according to the expert, is that this economic slowdown, which is a product of falling demand, worsens the employment situation.

“In the sense that people who want to look for a job, but cannot find it. Companies lower prices with offers, they don’t hire staff, except in December, which is the second month, although I doubt it was good,” says Yumibanda.

There are cities with an inflation rate lower than 1%, such as Cuenca with 0.97%, Machala with 0.92%, Ambato with 0.66% and Loja with 0.28%. “It would be best if there were no inflation, but it is inherent in the very model of the market economy,” says Marín.

What do other types of inflation mean?

There are several ways to measure inflation, and these are some of them:

A clear example of deflation was the COVID-19 pandemic where the economy showed signs of slow price dynamics. In 2020, an average annual deflation of 0.33 percent was recorded.

Basic basket: what is the price per city and why is it increasing?

The basic basket consists of 75 products with the probability that they will be consumed at least once a month by a household that meets three conditions: its income is equal to its expenses, it consists of 4 members, with 1.6 income recipients.

Nationally, the price was $784.65 as of November 2023, which implies that the average family income covers 107.05% of the total costs of that basket. Furthermore, this value is higher by 0.08% compared to the previous month.

As for the analysis by city, there are three that exceed $800, such as Quito at $819.37, Manta at $807.38, and Guayaquil at $800.78.

“The value of the basic basket in Guayaquil can be considered high compared to average wages, which indicates that it may be difficult for many families to cover these basic expenses with their income,” explains Marín.

He adds that in the case of Esmeraldas and Machala, a component of insecurity should be added: “It can worsen the family’s economic situation, making this basket even more difficult to achieve.”

In terms of regions, the Sierra has a base basket price of $798.05 and the Coast $771.25. “Everyone adjusts, even in rents (when the price of the basket increases). They adapt, albeit slowly. I believe that in most cities, there has been an increase in the basic family basket by 2023,” says Yumibanda.