Macroeconomic Forecast Honduras

n line with trends witnessed across the Central American region, Honduran inflation continues to march higher, jumping by 1.8% m-o-m in May, the largest monthly increment in a decade. On an annual basis, headline prices rose by an eight-year high of 11.3% y-o-y, highlighting the increasing burden on consumers across the country. The recent commencement of the PetroCaribe oil initiative with Venezuela should help to ease the pressure of rising global Brent crude prices. However, with soft commodities likely to stay elevated over the rest of the year, inflationary risks are fast deteriorating. We forecast an end-2008 CPI rate of 7.5%, but caution that this may be subject to an upward revision.

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