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Cost of basic basket has highest increase in history as country faces effect of national strike

Published on July 11, 2022

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According to the National Institute of Statistics and Censuses (INEC), the cost of the basic family basket, made up of 75 products, reached $751.04 in June 2022.

The annual increase in the Consumer Price Index (CPI) reached 4.23% in June, compared to the same period of 2020-2021, according to the National Institute of Statistics and Censuses (INEC).

In monthly terms, the CPI rose 0.65% in June 2022 compared to May 2022.

The CPI is one of the main indicators to measure the behavior of the cost of living.

The cities where consumer prices increased the most in the last year are Manta, with 5.43%; Guayaquil, with 4.78%; and Santo Domingo, with 4.67%.

In Quito, inflation rose 3.80% in the year between June 2021 and June 2022.

More expensive foods

The rise in prices is due to an increase in nine of the 12 groups of products that make up the basket which INEC uses to calculate the CPI.

Food and non-alcoholic beverages top the list, with a price increase of 1.55%.

The other categories that registered a high incidence on inflation were transportation, with a rise of 1.31%, and the prices of furniture and household items, with a 0.36% increase.

The products that registered the highest price increases between June 2022 and the same month of 2021 were yellow carrot, with an increase of 59%; high octane gasoline, with an increase of 50%; and vegetable oil, with a rise of 45%.

The increase in vegetable oil prices is due to the effects of the Russian invasion of Ukraine, which was the largest producer of sunflower oil in the world, and the low production of palm oil.

The category that fell the most in price was communication: its annual CPI was -0.004%.

Record basket

Roberto Castillo, director of the INEC, explained that the national strike that took place from June 13th to the 30th caused a shortage of food products and had an “inflationary effect” on the price of the basic food basket, which increased by $15.90.

“Monthly inflation for June closed at 0.65%, which means that between May and June the general price level of the basket of goods and services became more expensive by that percentage, the highest in the last 15 years, but it is an atypical month because 50% of this inflation is explained by the increase in the price of staple foods such as milk, onions, carrots and whole chicken, among others,” explained Castillo.

The cost of the basic family basket, made up of 75 products, was $751.04 in June 2022. This is the highest value in the INEC’s historical record.

In June 2022, the median household income reached $793.33. This means a positive theoretical difference between family income and the cost of the basic basket of $42.30 according to the INEC.

While the cost of the vital basket, made up of 73 basic products, was $529.07, which leaves a theoretical surplus in the family budget of $264.26.

Both baskets are a set of essential goods and services to meet the basic needs of the prototype household which, according to INEC parameters, is made up of four members, of which 1.6 people earn the basic salary, which is $425 per month.

Castillo stressed that the projections for the month of July indicate that the prices of essential goods will return, for the most part, to levels prior to the strike.

Cuenca’s basic basket is at $775.32

While the cost of the basic family basket nationally reached $751.04 in June, Cuenca came in even higher, with a basic basket cost of $775.32.

Luis Tobar, dean of the Faculty of Economics at the Salesian Polytechnic University (UPS), explained that in Cuenca the cost of the basic basket is attributed to the remittances received monthly by migrants. “As there is a greater amount of money, there is an increase in inflation in Azuay and in Cuenca in particular,” he said.

Likewise, the analyst mentioned that in addition to unemployment, the inflationary effect is due to speculation due to the lack of control over prices at the national level, and to external factors such as the increase in the cost of inputs, inflation at the world level and the Russia-Ukraine war conflict.

“Ecuador imports raw materials from the United States, its main trading partner, in that country inflation closed in May at 8.6%, which makes products more expensive, that affects the costs for companies and prices rise,” he stated.

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