Average inflation in Ecuador

Average annual inflation measures the mean rise in Ecuadorian consumer prices over a year, calculated as the average of the twelve monthly inflation rates. It condenses the year's inflationary pressure into a single figure.

It builds on the consumer price index (CPI) compiled by Ecuador's National Institute of Statistics and Census (INEC) from a regular price survey. The annual average compares the year's mean index with the previous year's, unlike end-of-period year-on-year inflation; long-run series usually come from the IMF.

Inflation erodes Ecuadorian households' purchasing power. As the economy is dollarised, Ecuador has no monetary policy of its own, so inflation tends to converge with that of the US and hinges mainly on imported prices and supply shocks.

Being a yearly average, it smooths peaks and troughs and lags behind end-of-period year-on-year inflation. It only captures the prices in the defined basket, and for the underlying trend it is worth watching core inflation, which strips out energy and unprocessed food.