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Household purchasing power declines during the lean season and COVID-19 pandemic

  • Key Message Update
  • Latin America and the Caribbean
  • June 2020
Household purchasing power declines during the lean season and COVID-19 pandemic

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  • Key Messages
  • Key Messages
    • The economic impacts of COVID-19 continue to constrain food access for poor households in urban and rural areas across the region, primarily due to a decline in household purchasing power resulting from the loss of formal and informal employment, declining remittances, and above-average staple food prices. The reduction in food access is exacerbating pre-existing drivers of food insecurity, including below-average 2019/20 crop production in the dry corridor, socio-political unrest in Haiti and Nicaragua, and long-term inflation in Haiti. Areas of highest concern in Haiti and the dry corridor of Central America will most likely range between Stressed! (IPC Phase 2!) or Crisis (IPC Phase 3) through September.

    • In Central America, the lean season started earlier than usual in Guatemala and Honduras. At a time when market dependence is high but purchasing power is low, speculative trading behavior and the closure of the Nicaragua-Costa Rica border have contributed to upward pressure on maize and bean prices, which are above average in many key reference markets. However, prospects for Primera crop production are favorable. Crops exhibit good vegetative development and the forecast indicates average to above average rainfall from May to August.

    • In Haiti, a rapid rise in the number of COVID-19 cases prompted the government to extend the current state of emergency until July. Inflation, coupled with the economic effects of COVID-19 on markets, continues to drive staple food prices significantly above 2019 and the five-year average. In addition, below normal and erratically distributed rainfall across most of the country is negatively affecting spring season crop production, resulting in persistent crop moisture stress since the end of March. The June/July harvest will most likely be below average.

    • The governments of Guatemala, Honduras, and El Salvador are distributing in-kind and cash food assistance to mitigate food insecurity. Assistance likely prevented worse outcomes in Honduras and El Salvador in May, resulting in Stressed! (IPC Phase 2!), but assistance is not anticipated to be sufficient to prevent Crisis (IPC Phase 3) outcomes in Honduras as the lean season progresses from June to September. In Guatemala, a scale up in food assistance is anticipated to improve outcomes to Stressed! (IPC Phase 2!) or Minimal! (IPC Phase 1!) from June to September. In Haiti, an increase in the population in Crisis (IPC Phase 3) is expected, with Crisis (IPC Phase 3) or Stressed (IPC Phase 2) outcomes anticipated through September.

    • In Nicaragua, where Stressed (IPC Phase 2) outcomes are expected, the government has yet to implement any movement restrictions to curb the spread of COVID-19. However, the epidemiological curve of COVID-19 continues to rise. Should the national healthcare system collapse, it would worsen the prevailing economic crisis associated with the ongoing socio-political conflict that began in 2018. On the other hand, if the government implements movement restrictions to limit the spread of COVID-19, it would most likely worsen food access among the poor urban population.

    This Key Message Update provides a high-level analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography. Learn more here.

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