Macroeconomic Forecast Nicaragua

Consumer price inflation in Nicaragua accelerated significantly in May 2011 to 8.29% year-on-year (y-o-y), from 7.11% y-o-y in April. This development could pose problems for Nicaraguan President Daniel Ortega ahead of the November 2011 elections, as it is the second consecutive month prices have increased following recent spates of food price inflation, after a period of moderation in early 2011. As rising prices represent a key political issue, we expect the authorities may try and bring inflation down - perhaps through the use of subsidies - in line with our end-2011 inflation forecast of 7.5%

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