Bukele suspends tariffs to combat inflation in El Salvador

Actions to address price increases appear to represent a new priority focus for Nayib Bukele, after previously addressing the gang problem with an initiative launched in March 2022.

The President of El Salvador, Nayib Bukeleannounced last Tuesday the suspension of tariffs on imported basic food products for a period of ten years, as part of its strategy to mitigate price increases, which have been a cause of national concern.

Bukele’s Economic Measures

Bukele presented the proposal to Congress to exempt a wide range of food products and the expanded basic basket from tariffs, thus seeking to reduce the impact of price increases.

“Hoy [martes]I will send a proposal [al Congreso] to suspend all tariffs on all products in the expanded basic basket, as well as on 70 other food products, for a period of ten years,” Bukele said on the social network X.

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Reactions and Criticisms

Economist Rafael Lemus criticized the measure, calling it “ineffective,” as he noted that most imported foods are already exempt from tariffs. He also expressed concern about the promotion of imports over local production.

“Ineffective measure, most have a 0% tariff rate,” wrote Lemus on the X network, stating that Bukele “encourages importing instead of producing locally.”

Context of the Salvadoran Economy

The country is facing a significant increase in the cost of living, with annual increases in food prices exceeding 40%. This situation has led to initiatives such as supermarket inspections and the opening of mobile markets to guarantee affordable prices directly to consumers.

Additional Government Actions

Bukele The agency also ordered an investigation into unjustified increases in the prices of insecticides and repellents, which is especially relevant in the midst of a dengue outbreak that has seriously affected the population, especially children.

Social and Economic Impact

Inflation in El Salvador’s dollarized economy reached 1.48% in the past 12 months through June. The cost of the basic monthly basket of goods is significantly higher than the minimum wage in several sectors, posing additional challenges for Salvadoran families.

Call to Responsibility

In a televised address, Bukele urged economic actors to stop abusive price increases, warning of the consequences for those who continue to harm consumers.

“Stop abusing the Salvadoran people [con los precios] or not to complain later,” he said.