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Inflation in El Salvador
If El Salvador’s main currency is the US Dollar, how is it that the country’s inflation is less than ours? El Salvador Inflation Rate – April 2023 Data – 1994-2022 Historical – May Forecast (tradingeconomics.com)
Shouldn’t it be the same?
Does the legal tender status of bitcoin affect the country’s inflation rate? How?
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2 Replies
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Is it because the “money printing” in the US isn’t getting spent in the El Salvador economy, so they (currently) likely have the same amount of USD sloshing around their economy as before the US’ money printing? Maybe it’ll show up down the road…
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Sir Michael Saylor says inflation is a vector, not the same rate in all markets, goods/services, or countries. Countries have local prices that are not all impacted equally by the money printing/spending in the USA.
Purchase Power Parity impacts the dollar street value much more than money printing by central banking. The Big Mac Index was an attempt to measure this between different countries where McDonalds operates. I think there are too many factors to truly ever measure or calculate the inflation rate, or to expect different countries to have the same rates.
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