Guatemala Inflation 2026: 0.96% — CPI INE + Banguat Target Band

Quick read: Annual inflation in Guatemala was 0.96% in January 2026 (latest INE data), with month-on-month variation of -0.18%. Banguat’s target band is 3.0% to 5.0% (point target 4.0% ±1.0 pp). Guatemala sits ~2 percentage points below the floor of the band — a signal of weak domestic demand. Banguat responded with 7 consecutive cuts to the policy rate (5.00% → 3.50% between Jun-2024 and Nov-2025) to stimulate credit. Sources: INE + Banguat. Updated May 16, 2026.

What is the CPI and why does it matter?

The Consumer Price Index (CPI) is Guatemala’s official price thermometer. It is published monthly by the Instituto Nacional de Estadística (INE) and measures the cost of a representative basket of 279 goods and services consumed by Guatemalan households.

The CPI matters because it defines:

• The real purchasing power of the minimum wage, salaries and remittances
• Banguat’s monetary policy (raises or lowers the policy rate depending on the gap to target)
• Contractual adjustments (rents, indexed salaries, pensions)
• The calculation of real GDP vs nominal GDP

Two figures are reported each month:

1. Month-on-month variation: CPI change versus the previous month. Useful for detecting one-off moves (harvest, price shocks, seasonality).
2. Inflationary rhythm (annual variation): CPI change versus the same month last year. This is the figure compared to Banguat’s target and the one media headlines as “inflation”.

The CPI basket is updated periodically using the National Survey of Family Income and Expenditure (ENIGFAM) to reflect actual consumption patterns. The main groups are: food and non-alcoholic beverages (~28% weight), transport (~13%), housing and services (~12%), restaurants and hotels (~7%), among others.

Current inflation and target band

Banguat has operated under an explicit inflation targeting regime since 2005. The point target is 4.0% annual with a tolerance band of ±1.0 percentage point, giving an acceptable range of 3.0% to 5.0%.

With the current figure of 0.96%, Guatemala is:

• 2.04 pp below the floor (3.0%) of the band
• 3.04 pp below the point target (4.0%)
• 4.04 pp below the ceiling (5.0%) of the band

This is not a one-off observation. Inflation has been below the band for several consecutive months, which technically constitutes a “persistent downward deviation” from target. In Banguat’s framework, that justifies an expansionary monetary policy stance (declining policy rate) to stimulate domestic demand.

Why Guatemala is below target

Several structural and cyclical factors explain sub-target inflation:

1. Strong quetzal. The USD/GTQ exchange rate has traded between Q7.60 and Q7.80 during 2025-2026, historically strong levels for the quetzal. A strong quetzal makes imports cheaper (fuel, imported food, electronics, vehicles) and translates directly into lower internal price pressure. Approximately 30-35% of the CPI basket has an imported component.

2. Lower international commodity prices. Brent crude has traded in moderate ranges during 2025-2026, without the shocks of 2022-2023. Prices for staple grains (yellow corn, wheat) and oils also show no upward pressure. This means cheaper gasoline, stable transport costs and contained imported-food prices.

3. Moderate domestic demand. Private consumption growth has been slower than in prior years, reducing pressure on prices. This is reflected in slower bank credit growth and contained service-sector price behavior.

4. Remittances still flowing but the post-pandemic boom has cooled. Remittances continue to exceed $20 billion annually, but the growth rate decelerated after the post-pandemic peaks. Less household income expansion equals less demand pressure.

5. Stable utility tariffs. Electricity, municipal water and regulated fuels have seen only minor adjustments over the past 12 months.

Don’t confuse this with deflation. Annual inflation remains positive (0.96%) — prices are still rising year-on-year, just very slowly. Sustained deflation would require several consecutive months of negative annual variation, which is not Guatemala’s situation. The single -0.18% month-on-month reading does not mark a trend.

Impact by profile: who wins, who loses

Low inflation does not affect all households equally. Here is how it lands by consumer profile:

Savers (term deposits, CDP)

Gain purchasing power. If your deposit pays 4.5% nominal at 12 months and inflation is 0.96%, your real rate is ~3.5% — quite healthy compared to years of 6-8% inflation when real rates were zero or negative. It is one of the few moments when saving in quetzals delivers a meaningful real return. See deposit rates by bank in Bank Active and Passive Rates.

Fixed-rate debtors (mortgages, loans)

Lose the “debt erosion” benefit. High inflation traditionally reduces the real value of debt contracted years earlier. With low inflation, that erosion is minimal. However, new interest rates are lower too (because of Banguat’s expansionary stance), so refinancing may make sense if your mortgage is from 2022-2023 at high rates. See Monetary Policy and Policy Rate to understand transmission to commercial rates.

Diaspora in the U.S. (sends remittances)

Your dollar buys more local goods, but the effect is neutralized if the exchange rate appreciates (fewer quetzals per dollar). In 2025-2026 both forces happened simultaneously: a favorable exchange rate for the quetzal and low local inflation. The recipient in Guatemala receives quetzals that hold purchasing power well, but the nominal quetzal amount may be smaller than expected. See Remittances Guatemala to compare platforms.

Low-income families (food basket)

Moderate benefit. Food is ~28% of the CPI and has had contained increases. But low-income families spend 40-50% of their income on food, not 28%, so the CPI’s impact on their real wallet depends heavily on staple grains (corn, beans), tortillas and chicken — products that INE tracks separately in the Sensitive Products Price Index. See Canasta Básica Guatemala for current basket costs.

Business owners and merchants

Margin pressure. With stable imported costs and moderate domestic demand, raising prices without losing customers is difficult. Importers benefit (low dollar weight in costs), exporters lose competitiveness (strong quetzal = Guatemalan products more expensive abroad). Coffee, sugar, cardamom and apparel are the most affected.

Salaried workers

Modest real raises. Salary adjustments typically follow expected inflation. With low inflation expectations, 2026-2027 salary adjustments will be smaller in nominal terms — but in real terms they may match or beat years of high inflation. The 2026 minimum wage (Q4,002.28 non-agricultural) is gaining purchasing power against the basic basket.

Inflation vs Policy Rate: how they interact

Banguat has a dual mandate: keep inflation inside the target band and promote financial conditions that support growth. Its main tool is the policy rate (tasa líder), currently at 3.50% (effective since November 26, 2025).

The mechanism is direct:

• Inflation above the band → Banguat raises the policy rate → credit becomes more expensive → demand cools → inflation falls
• Inflation below the band → Banguat lowers the policy rate → credit becomes cheaper → demand recovers → inflation rises
• Inflation inside the band → policy rate stable → “neutral” stance

Since June 2024, with inflation falling consistently, Banguat has applied 7 consecutive cuts totaling 150 basis points:

The policy rate transmits (with a lag) to commercial active rates (12.47% system average in May 2026) and passive rates (4.18% average). This means if inflation stays at 0.96%, room for more cuts exists, but Banguat usually moves cautiously to avoid cuts that over-stimulate credit or trigger exchange-rate pressure.

More on the transmission mechanism: Monetary Policy and Policy Rate Guatemala.

Regional comparison

Regional figures shift month-to-month — check official sources for the most recent data. Below, a qualitative orientation of where Guatemala sits:

Notes:

• El Salvador has been dollarized since 2001 — its inflation tracks the U.S. When the Fed contains inflation, El Salvador “imports” low inflation.
• Costa Rica has a profile similar to Guatemala (sub-target through much of 2025) for similar reasons: strong currency and moderate domestic demand.
• Mexico operates in a regime comparable to Guatemala’s, but with a much larger economy and greater exposure to external shocks.

Exact figures are updated by each country’s central bank. This comparison is illustrative.

Forecast: what Banguat says

Banguat publishes inflation projections in its quarterly Monetary Policy Report (March, June, September, December). Projections are built with econometric models and consider:

• Recent CPI trajectory
• International commodity price projections
• Surveyed inflation expectations (Inflation Expectations Survey)
• Expected exchange rate
• Expected GDP growth

For general orientation, recent reports pointed to gradual convergence toward the 4.0% target by late 2026 or early 2027. But the January 2026 data (0.96%) suggests convergence may take longer.

Important: Projections are uncertain — they depend on variables like oil prices, dollar behavior, aggregate demand and climate shocks. Check banguat.gob.gt directly under “Política Monetaria → Informe de Política Monetaria” for the latest official projections.

Qualitative scenarios:

• Rapid convergence (unlikely): domestic demand accelerates + exchange rate depreciates → inflation rises toward 3-4% in 2026
• Gradual convergence (base case): stable exchange rate + moderate demand → inflation approaches 2-3% in 2026, reaches target in 2027
• Persistent sub-target: quetzal stays strong + commodities show no pressure + credit takes time to reactivate → inflation stays 1-2% through much of 2026

Banguat retains room for more policy-rate cuts if the sub-target scenario persists.

For the diaspora: what it means for your remittances

If you live in the U.S. and send remittances to Guatemala, the combination of low local inflation + favorable exchange rate for the quetzal has cross-cutting effects:

What the receiver in Guatemala gains:

• Their quetzals retain real purchasing power (prices barely rise)
• Savings in passive accounts (4-5% nominal) deliver positive real returns
• Imported goods (electronics, clothing, appliances) are relatively cheap

What the send loses in value:

• Each dollar sent converts to fewer quetzals (Q7.62 vs Q7.85 two years ago)
• The nominal amount in quetzals is smaller than if the exchange rate were Q8.00
• Platforms like Wise and Remitly offer better rates than traditional banks, but the interbank rate remains the ceiling

Operational tip: always compare the effective rate (including the exchange spread), not just the nominal fee. A platform with $0 fee but a Q7.45 exchange rate may be worse than one with $3 fee and Q7.60 exchange rate.

See Remittances from the U.S. to Guatemala for an updated platform comparison.

Methodology and sources

Primary sources used on this page:

• INE — Instituto Nacional de Estadística: publishes the monthly CPI with breakdowns by division, region and group. Source for the 0.96% annual and -0.18% month-on-month figures for January 2026. ine.gob.gt
• Banguat — Bank of Guatemala: publishes the inflation target, the policy rate and monetary policy reports. Source for the 3-5% range and rate decisions. banguat.gob.gt

How we collect the data:

Our daily pipeline queries Banguat for rates and aggregates the most recent inflation figure published by INE. Data is stored at static/data/banks/interest-rates-latest.json and refreshes automatically.

Update frequency:

• Banguat policy rate: when there is a Junta Monetaria decision (~every 3 months)
• INE CPI: monthly (first 7-10 business days of the following month)
• This page: reviewed at the close of each INE release

Limitations:

• We do not yet publish a historical monthly CPI series on this page (the pipeline is in construction). For now we show the latest reading + the policy-rate trajectory as a proxy for the monetary-policy response.
• Regional comparisons are qualitative and should be verified against the corresponding central banks for exact data.

See General Methodology for source policy, frequency and verification.

Inflation Score: how it affects you

Because inflation is a single number per month (it doesn’t admit a ranking among alternatives), instead of a leaderboard we provide an Inflation Score for Your Wallet by profile. Assume the current regime (sub-target inflation, 0.96%):

How the score changes if the regime shifts:

• If inflation rises to 3-5% (in band): savers lose, debtors gain erosion benefit, exporters gain competitiveness
• If inflation exceeds 5% (above target): everyone loses purchasing power, Banguat raises rates, credit gets expensive
• If we enter sustained deflation (negative): savers gain more, debtors lose severely, economy cools further

The current regime (sub-target near 1%) is favorable for savers and importers, neutral for salaried workers, and adverse for exporters and remittance receivers (via the exchange-rate channel).

Related pages

• Monetary Policy and Policy Rate Guatemala — how Banguat uses the policy rate to respond to inflation
• Bank Active and Passive Rates — what each bank pays for savings and charges for loans
• Canasta Básica Guatemala — cost of the INE food basket
• Quetzal-Dollar Exchange Rate Today — live USD/GTQ rate
• Remittances from the U.S. to Guatemala — Wise, Remitly, Western Union comparison
• Methodology and Sources