Lean season in full swing amid economic challenges

Economic dynamics — unfavorable for purchasing power during the annual lean season — will reduce access to food for poorer households in both rural and urban areas. This is expected to keep poor households in most of the region Stressed (IPC Phase 2) until September. Meanwhile, in the areas of concern in the east and in the Dry Corridor of Honduras, poorer households will step up their use of coping strategies, such as reducing the number of meals per day, continuing to depend on credit or food support from third parties, and selling productive assets to maintain minimum consumption. As such, they will remain in Crisis (IPC Phase 3) until September 2022, when the primera harvest will take place.

In April, headline inflation continued its upward trend. According to the Consumer Price Index, year-on-year variation in food and non-alcoholic beverages stood at 10.9 percent in El Salvador, 10.4 percent in Honduras and 16.2 percent in Nicaragua. These increases are strongly related to the rise in international prices of fuel and some food products.

As a result, there was also strong variation in food prices in all three countries in April. In the particular case of staple grains, in April, all three countries reported increases in the wholesale prices of white maize of between 63.1 and 70.7 percent, and 48.5 and 62.0 percent, compared to the figure from last year and the five-year average, respectively, driven by high international prices. Wholesale red bean prices, on the other hand, remained stable in April compared to March 2022, but were still significantly higher than last year, with variations of between 16.9 and 29.6 percent, and higher than the five-year average, with variations of between 19.3 and 30.0 percent. Prices of wheat-based products and vegetable oils have also increased significantly.

Primera planting is expected in late May and early June, with a reduction in planting intentions expected among most farmers, especially those without subsidies to mitigate the impact of high fertilizer and agricultural input prices. This will result in a slight reduction in domestic production in the three countries. The near-average accumulated rainfall forecasted for most of the region in the coming weeks will allow for normal crop development. However, starting in July, above-average rainfall is expected, which could result in some localized losses due to excess moisture. 

The most recent economic activity indexes published show modest growth in the countries of the region compared to last year, driven by financial activities, industry, transportation and communication. In terms of tourism activity, Nicaragua and Honduras showed year-on-year variations of 16.6 and 33.6 percent, respectively. All of this indicates that this sector of the economy is recovering, which means greater sources of income for households whose livelihoods depend on it.