Which Latin American Country Is Enjoying the Sharpest Deflation?

Mexico, Chile and Peru are seeing prices drop, while year-on-year inflation in Brazil and Argentina has increased, but Costa Rica has the world’s second-sharpest deflation after Afghanistan

Photo: AFP/Getty Images
By Bloomberg Línea
August 17, 2023 | 11:30 AM

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Bloomberg Línea — While Argentina and Venezuela continue to suffer high inflation that is pulverizing the salaries of the population, most Latin American countries have been achieving a slow down in price hikes, after the hikes they suffered in the post-pandemic period.

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The two main economies in the region, Brazil and Mexico, have gradually managed to moderate the generalized price increases and bring them closer to the targets set by their central banks.

However, among the countries with the lowest consumer price indexes in the world is Costa Rica, where in July 2023 there was a year-on-year deflation of 2.29%.

Curiously, Costa Rica had been one of the countries in which prices had shot up most strongly with the inflationary flashes of 2022, to the point that it was one of the countries in which the consumer price index (CPI) had exceeded double digits, having hit 12.13% in August last year. Today, that seems to be long in the past.


Globally, only Afghanistan has seen a greater fall in prices than twelve months ago: deflation there is 2.8%.

Among the world’s major powers, there is also a country that has been experiencing year-on-year deflation: China, the world’s second largest economy, which closed July with an inflation rate of -0.3%.

Brazil and Mexico

  • In Brazil, inflation ended July at 3.99% year-on-year, up from 3.16% in June. Even so, the South American country has been showing a consistent decline, which took a pause in the seventh month of the year.
  • In Mexico, year-on-year inflation stood at 4.79% in July, compared to 5.06% in June.

Argentina and Venezuela

  • In July, Venezuela continued to be the country with the highest annual inflation in the world, although the figure fell to 398.2%, a drop of 6.2 points with respect to June.
  • The third country with the highest inflation in the world is Argentina, which ended July with a consumer price index of 113.4%. To make matters worse, the country had to devalue its currency on Monday, and private consulting firms anticipate an acceleration of inflation in the coming months.

The rest of Latin America

These are the year-on-year inflation levels for the region’s countries:

  • Bolivia: 2,¡.7%
  • Chile: 6.5%
  • Colombia: 11.78%
  • Ecuador: 2.07%
  • El Salvador: 3.34%
  • Guatemala: 4.53%
  • Honduras: 5.15%
  • Nicaragua: 8.17%
  • Panamá: 0.58%
  • Paraguay: 3.5%
  • Perú: 5.88%
  • Uruguay: 4.79%
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