Macroeconomic Forecast Guatemala

Inflation continues to tick up in Guatemala, reaching 7.63% y-o-y in August, up 7.04% from the month before, despite the central bank's 25 basis point interest rate hike in July. However, we believe that supply-side pressures are largely to blame, and with Brent crude prices falling and our Commodities team forecasting food costs to soften over the remainder of the year and throughout 2012, we hold to our end-2011 forecast of 4.5%, anticipating that inflation will slow in H211, and removing the central bank's impetus to hike rates further.

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