Inflation in Ecuador is fueled by super gasoline

Ecuadornews:

In September, the Price Index grew significantly. One of the main reasons was the increase in the price of super gasoline to $ 2.98.

Thus, after twelve months of negative annual inflations, a positive inflation of 0.23% was registered last September, according to figures from the National Institute of Statistics and Census (INEC) yesterday.

Since September 2017 to August 2018 there were negative annual inflations, so some analysts said that the country had entered a cycle of deflation; although others explained that it was only a price adjustment given the lack of liquidity in the national economy.

According to INEC, this annual inflation figure for September (0.23%) is the second lowest for ten years.

In any case, the monthly inflation (that is, the one measured between August and September of 2018) stood at 0.39%; additionally, cumulative inflation (from January to September 2018) was 0.47%.

This result is mainly explained by the increase in the prices of some products of the Transport, Communications and Food and Non-Alcoholic Beverages divisions.

Among the transport factors that contributed most to the increase in inflation in the first place is the increase in the price of super gasoline, to which the government withdrew the subsidy since August 27.

On the subject, Alberto Acosta Burneo, editor of the publication Análisis Semanal, considered that the negative inflations presented are not due to a collapse in demand (which is typical in deflation), but because companies reduce their costs to compete with imported goods and therefore are gaining competitiveness.

Meanwhile, services of various kinds, such as leases, professional services or restaurants, among others, continue to rise.

On the other hand, the increase in inflation behaved differently by cities. The one that experienced the highest increase in inflation was Santo Domingo with 1.14%. Quito had 0.92% inflation, while Guayaquil registered -0.02%. The Sierra was the region with the highest inflation with 0.47%.

Stop at refinery

The Shushufindi Refinery (Sucumbíos) today begins a programmed strike of the Crude Unit 1 (R1) for a period of 18 days. This atmospheric distillation area will be subjected to a maintenance process of its equipment, Petroecuador reported yesterday. Crude Unit 1 processes 10,000 barrels per day of oil, from which base gasoline (heavy naphtha plus light naphtha), diesel 1 and 2, jet fuel and reduced crude oil are obtained. (I)

Source: https://www.eluniverso.com/noticias/2018/10/05/nota/6985526/inflacion-se-avivo-gasolina-super