Macroeconomic Forecast Nicaragua

BMI View: Consumer price inflation (CPI) in Nicaragua came in at 8.5% y-o-y in November 2010 the highest headline reading since February 2009. We attribute this dramatic uptick in CPI to rising cost price pressures - primarily from food - as opposed to any significant demand pull factors. Given that inflation has risen so quickly, our 5.0% y-o-y estimate for end-2010 no looks likely to fall short of the December 2010 print. Nevertheless, we believe this rise in prices will be transitory, meaning that CPI should still head towards our 7.5% y-o-y target for end-2011.

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