If compared to dollarized countries, since 2016, Ecuador has had much lower inflation levels than the United States and El Salvador; while the price increase has been similar to that of Panama.
Dollarization in Ecuador has fulfilled one of its main functions: Take money printing out of the hands of politicians and keep inflation under control.
A few days after the completion of the VAT increaseand its inevitable impact on prices, it is worth comparing how inflation has evolved in the Ecuadorian economy compared to other developed economies on the Continent.
Thus, the main comparison must be made with USA. From 2016 to 2023., US inflation has fluctuated between 1.57% to 7.40% annually. While the Ecuadorian inflation has fluctuated from -0.93% to 3.74%.
Specific, The price increase in Ecuador has been up to three times less than in the United Statess.
In the graph you can see that, Even between 2016 and 2017, when the VAT increase from 12% to 14% was in effect, inflation in Ecuador went from 1.12% to -0.2% annually. In that period, the United States had a price increase of 2.2% in 2016 and 2.18% in 2017.
Less than in El Salvador and similar to Panama
From 2016 to 2023, inflation in Ecuador has been lower than that recorded in El Salvador. Thus, for example, Salvadorans had a price increase of more than 5% in 2021; while in Ecuador it was 1.94%.
In 2022, El Salvador recorded inflation of around 7%; but in Ecuador, even with the impact of high oil prices and the violent strike in June, inflation reached 3.74%.
The increase in prices in the Ecuadorian economy, however, is very similar to that of Panama. In 2022 alone, Panamanian inflation of 2.9% was lower than that of Ecuador. (J.S.)
In Ecuador it would take almost five years to accumulate a price increase equivalent to the inflation of just one month in Argentina