Honduras Inflation Climbs to 6.28% on Fuel and Food

Honduras' inflation climbed to 6.28% in September, the sharpest annual increase in recent data, according to the country's central bank. The bounce was primarily driven by rising fuel and food prices, reflecting global market forces and local weather conditions. Higher oil prices, linked to geopolitical tensions, increased transportation costs, while the El Niño weather phenomenon exacerbated the price of dairy, sugar, beef, and red beans.

Despite the uptick, core inflation - excluding the most volatile items - remained within the central bank's target range at 3.47%. Fuel, accounting for 2.40 points, and food and non-alcoholic drinks, adding 1.57 points, were the primary contributors to the surge. Transport costs rose 16.05% year-on-year, while housing, utilities, and services added 0.74 points.

The southern region, bordering El Salvador and Nicaragua, experienced the highest inflation at 7.49%, dropping slightly from the previous month. The capital district of Tegucigalpa saw a smaller increase of 6.07%. Since the beginning of the year, prices have climbed 5.29% in total, inching up from 4.00% in the same period last year.

The Banco Central de Honduras has raised the policy rate by a quarter point to 6.00% in response to these inflationary pressures, in line with its target of 4% with a tolerance of one percentage point. The ongoing hike and potential future adjustments hinge on fuel prices and the US Federal Reserve's stance.