The cost of living in El Salvador will increase by $214 between 2019 and 2023, according to the CDC.

According to the non-governmental Center for Consumer Defense, the figure, calculated by its own methodology, went from $706 to $920.

by Moises Alvarado
January 10, 2024- 23:05

The cost of living is a calculation of the cost of acquiring the goods and services necessary for a decent life for an average family. Every nation has its own way of establishing. In El Salvador, the state does this by multiplying the value of the basic basket by two. With that parameter, the cost of living will be $515.62 by October 2023.

However, the truth is that a family not only eats some food, but also takes various basic services (water, electricity, telephone) and transport to get around, as well as paying for non-food products. You must also allocate funds for housing.

For this reason, the non-governmental Center for Consumer Defense (CDC) has established its own method for calculating the cost of living, in which it includes 9 additional foods in the basic basket, such as cream and hard cheese; Also 12 daily use items including toothpaste, toilet paper and washing detergent. The company has also created a department for clothing and rental expenses.

WATCH: More than half of Salvadorans go into debt at the end of the month by 2023, according to IUDOP survey

With these additions, he established in 2019 that the actual cost of living for a family in El Salvador was $706. Applying the same criteria, the CDC revealed that the figure was $920 for October 2023 (the date taken to conduct the study), which was $214 more than four years earlier, an increase of 23%.

The body disclosed these findings in a report released yesterday, Wednesday, in which it also proposed an increase in the minimum wage.

“We must think that to live a dignified life, one need not only be assured of his right to food. Aadhaar should have all the elements that Salvadorans use on a daily basis,” commented Danilo Perez, Executive Director of the Consumer Defense Center.

Therefore, neither urban nor rural minimum wages are currently able to cover these needs. Already with the discount, this is about $328 per month in the city. In the field, the figure reaches only $218.52.

The CDC included several data in its report that indicate that Salvadorans are not having a good time in their economy. For example, 45.8% bought less food and 14.2% replaced low-value products in their diet, according to the 2023 FUNDAUNGO survey.

Another study, conducted by the University of Francisco Gavidia, indicated that protein consumption was significantly affected, although 75.3% of Salvadorans reduced their beef consumption; 40.3%, chicken; 32.2%, eggs; And 23.5% have reduced their cheese consumption due to higher prices.

Hence, the poverty rate has increased significantly since 2019. According to official data, at the end of 2022, 1.69 people were in poverty in El Salvador, which represents an increase of 10.12% compared to 2019.

In the category of extreme poverty, according to the Economic Commission for Latin America and the Caribbean (ECLAC), since 2019, the number of people falling into this situation in the country has increased by 200,000. In 2019, this rate increased from 5.6% to 8.7%. These are those who are no longer able to cover the cost of a basic basket.

The minimum wage needs to be increased

Considering the fact that poverty and extreme poverty have increased significantly, it is necessary to find solutions. One of them, according to the Center for Consumer Advocacy, is to raise the minimum wage to a scale that would reach $920, its broadest measure of the cost of living.

“Obviously, this is a very high value for the current productive capacity of the national economy,” the institute clarified in a report published yesterday. For this reason, they propose a 25% increase to all minimum wages, which in El Salvador is 11.

For example, for commerce and services (which is the same in industry), which is currently $364.80, a $91.20 increase is proposed, so it will remain at $456. That, as the reader will see, doesn’t quite reach 50% of the same organization’s comprehensive cost-of-living calculation that it proposes ($920), but it’s much closer than the current one, barely 40%.

WATCH: Basic basket fell in November, but still third most expensive in 2023

The minimum wage in this country corresponds to the rural area (picking coffee and cotton) and is $243.46. With the CDC proposal, they would increase by $60.86 to $304.32.

According to the organization’s calculations, with the measure, 732,000 people will improve their salaries, reaching 26% of the entire employed population.

However, the most important data relates to the impact on poverty: in the case of relative poverty, it will decrease by 4.4 percentage points; At the extreme, the reduction would be 3%, bringing the total percentage to 5.7%, roughly the level of 2019.

“It will improve private consumption, the main variable of which is wages. For companies, it will mean increased sales, profits and investment,” the CDC concluded in its report.