El Salvador improves in the inflation index despite the fall of bitcoin

El Salvador improves in the inflation index despite the fall of bitcoin
Key facts:
  • El Salvador ranked as the country with the third lowest inflation in the region in April.

  • Meanwhile, bitcoin remains very far from the purchase price of El Salvador.

While inflation is increasing at an accelerated pace around the world, El Salvador managed to slow down its inflation between the months of March and April. It even improved one position among the nations of the area in terms of inflationary indices.

The salvadoran year-on-year inflation it went from 6.7% to 6.5% from one month to the next, as can be seen from the comparison of the reports of both months of the Central American Monetary Council (SECMCA). These data come from the central banks of the Central American countries, in addition to the Statistics and Census Institute of Panama.

According to these data, no other country in the region managed to lower its inflation index in that period, although there were two that remained with lower levels than those of El Salvador: Guatemala and Panama, with 4.6% and 3.7% respectively in the month of April.

This places El Salvador as the third economy with the lowest year-on-year inflation index in Central America for the month of April. The country rose one place by surpassing Costa Rica, which ranked third in March and had a strong inflationary relapse in April.

President Nayib Bukele stressed via Twitter that an opposition media in his country (El Mundo) echoed the news. About it, catalogued the fact as a sign that the Salvadoran response to a worldwide phenomenon is being “better than many claimed.”

Indeed, criticism of Bukele abounds in the press and among local economists. Particularly in the economic and with a greater emphasis since the adoption of bitcoin as legal tender a few months ago.

“Bitcoin has become part of the problem”

Economists such as Ricardo Castaneda, coordinator of the Central American Institute of Fiscal Studies (ICEFI) study center for El Salvador and Honduras, are part of this trend that questions the adoption of bitcoin.

Quoted by Primero Informe, Castaneda assured that, while the the country’s financial problems were not caused by the adoption of bitcoin, the cryptocurrency has aggravated them. “Bitcoin stopped being a solution and has become part of the problem,” the economist assured.

Certainly, bitcoin’s fall from its all-time highs last year (right now more than 50% from the $69,000 mark) has affected the country’s investment in the cryptocurrency.

As we have previously reported in Criptonews, Bukele’s bitcoiner portfolio it is in a rather high unrealized losses. However, it cannot be considered a loss until those bitcoins are not reported as sold below their purchase price.

In addition, criticism of the adoption of bitcoin has been given from all sides, regardless of the performance of the cryptocurrency on the market. The International Monetary Fund and other institutions have attacked the Salvadoran government’s move, although the latter has remained firm in its bet.