Ecuador Benign Inflation Reading in July but Consumer Price Data Was Distorted by New CPI Basket

Economics Research 18 August 2026 | 8:21AM EDT

Ecuador: Benign Inflation Reading in July but Consumer Price Data Was Distorted by New CPI Basket

Bottom Line: The July consumer price report introduced a new CPI series with an Sergio Armella | updated composition, weight structure, and base year (July 2025-June 2026 = 100). Goldman Sachs & Co. LLC Under the new series, consumer prices declined by 0.09% mom in July despite a 29.1% mom increase in electricity driven by further normalization of tariffs after a one-off subsidy affected electricity bills in the prior two months (-42.4% mom in May and +33.1% in June). The annual headline inflation reading declined by 27bp to 1.39% yoy. Core prices excluding food and energy (a GS estimate) declined by 1.06% mom, affected by the new product weights, with the annual reading declining by 1.13pp to 1.25% yoy. As an example of the impact of the new weight structure, fuel prices declined by 2.62% mom in July, but diesel prices were up 1.4% in the month, low-octane gasoline prices rose 1.75% and prices at the pump for the unregulated high-octane gasoline increased by a large 7.66% in July.

Headline Inflation: -0.09% mom (1.39 % yoy) vs GS at 0.21% mom.

Core Ex-Food and Energy Inflation: -1.06% mom (+1.25% yoy).

Food Inflation: -0.05% mom (-0.71% yoy).

Energy Inflation: +9.61% mom (+8.96% yoy).

1. The July consumer price report introduced a new CPI series with an updated composition (thirteen categories, compared to twelve before, consistent with international standards), weight structure (it incorporates 348 products compared to 359 before), and base year (July 2025-June 2026 = 100). 2. In the new series, food and non-alcoholic beverages represent 22.52% of the basket (33.94% of products) compared to 22.45% in the previous basket (32.03% of products). The weight of goods represents 56.2% of the new basket (76.44% of products) compared to 57.59% (77.72% of products) in the previous basket. As such, services represent 43.80% of the new basket’s structure compared to 42.41% in the previous. 3. Headline inflation printed at -0.09% in July with annual inflation falling to +1.39% yoy from +1.65% yoy in June. 4. Excluding electricity, a source of recent volatility due to the phasing in and out of extraordinary subsidies, consumer prices declined by 0.57% mom with the annual reading tracking at a higher 1.67% yoy, below the 2.42% yoy in June.

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5. Core Ex-Food inflation registered a benign -0.13% mom variation with food prices declining by 0.05% mom extending the decline seen in the prior five months. Annual core ex-food inflation is now tracking at 2.01% yoy, down from 2.23% yoy in the previous month. 6. Core inflation excluding food and energy (GS estimate) declined by 1.06% mom in July. Within energy, fuel prices declined by 2.6% mom in July due to a reweighting as gasoline (high-octane fuel prices rose by 7.7% mom and low octane gasoline prices rose by 1.7% mom) and diesel (+1.4% mom) prices increased. The annual core measure fell by 1.13pp to 1.25% yoy in July. 7. The price of services rose by 0.71% mom (+1.34 % yoy) impacted by electricity prices which rose (29.1% mom), and goods prices fell by 0.73% mom in July (+1.44% yoy) driven in part by the reweighting towards lower fuel prices. 8. Ten of the thirteen categories of the CPI basket registered price declines in July. Prices in the housing and utilities category rose by a high of +4.25% mom, and transportation prices rose by +0.40% mom. Prices in the financial services category, in turn, declined by 3.70%, fell by 1.49% mom in the furniture and housing goods category and another 1.26% mom and 1.20% mom in healthcare, and recreation and culture, respectively.

July’s Consumer Price Report Impacted by New CPI Basket

Percent change, month ago Percent change, year ago 1.5 5.0

1.0 0.0 Headline mom 0.0 -0.5 Core Ex-Food & Energy mom -1.0 Headline yoy (rhs)

-1.0 Core Ex-Food & Energy yoy (rhs) -

Source: INEC, Goldman Sachs Global Investment Research