Nicaragua’s “market economy” caught in the worst inflationary spiral in Central America

In the past two years, Nicaragua has experienced the highest increase in prices across Central America. Basic groceries have seen the most significant spikes, while the purchasing power of Nicaraguans decreases. DIVERGENTES visited markets, supermarkets, and popular stores in an attempt to purchase the 22 primary products in the basic food basket, using the minimum wage of a state worker, and found that many families can barely afford to buy a third of the necessary food


Editor’s Note: This report was developed between April and the first week of May 2024. On May 14, media outlets such as La Prensa reported the increase of the basic food basket cost to 20,447.62 córdobas, according to recent data published by the National Institute of Development Information (Inide)

It’s a hot Saturday in early April in Managua, with the usual stifling heat that intensifies this time of year. The vegetable section at Mercado Oriental is not too crowded. Some vendors stack vegetables in baskets while spraying with water others spread out on the tables. Walking through this crowded, uneven, humid alleyway, one can see stacks of tomatoes, potatoes, plantains, bell peppers, onions, radishes, and countless other vegetables and spices along the sides. Everything looks fresh and ready to go.

“I’ve sold a lot of these plantain baskets,” a vendor tells the others. Before they can say something, she adds, “People like these baskets because they think it’s cheaper.”

The baskets she sells have five green plantains and cost 25 córdobas. Each of these baskets weighs approximately 2.35 pounds, meaning one pound costs 10.63 córdobas, about 5.6 córdobas less than the pound of plantains (16.30 córdobas) reported in the latest February 2024 survey by the National Institute of Development Information (Inide).

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This price for plantain baskets is only available in popular markets like this one, as in supermarkets, the same pound of green plantain costs 23.40 córdobas (11 per unit), seven córdobas more than the official rate and more than double the cost in popular markets.

Green plantains are an example of some of the basic food basket products that have had a significant price increase (49.67%) since the political crisis started in 2018, according to an analysis of prices conducted by DIVERGENTES.

Prices of basic products have increased

All 22 food products in the basic food basket have had an increase in price. In DIVERGENTES, we categorized the increases as moderate (25% to 40%) for sugar, pork, fish chops, and eggs; considerable (40% to 60%) for rice, milk, tortillas, pinolillo, bread, squash, and green plantains.

Meanwhile, those that have had an increase between 60% and 75% were classified as significant, including oil, beef, pasta, and white onion. And those with increases between 80% and 145% were classified as excessive, such as beans, dry cheese, tomatoes, potatoes, bell peppers, oranges, and cabbage.

To find the cheapest prices for these latter foods—except for beans, which cost 30.75 córdobas per pound in supermarkets, compared to 36 per pound in the market—you have to go to one of these popular shopping centers.

We visited Mercado Oriental, where a pound of dry cheese costs 100 córdobas, while in supermarkets, it’s nearly 200 córdobas for less than a pound. The trip to the stores confirmed that 16 out of the 22 products are cheaper in markets than in supermarkets. Of these 16 products, only nine (eggs, cheese, beef, pasta, tomatoes, onions, potatoes, bell peppers, and green plantains) were found cheaper than the official list established by Inide. Most are vegetables and fruits produced in Nicaragua.

There are products like rice and squash that are not cheaper, even when bought at markets. Another 10 items, including tortillas, oil, sugar, fish chops, milk, pork, chicken, pinolillo, cabbage, and oranges, are even more expensive in popular markets than on the official list.

A curious fact is that a pound of sugar, pork chops, chicken, and pinolillo can be cheaper in supermarkets than in markets. Although shopping at popular markets remains cheaper, the price difference between popular places and other businesses is decreasing. The rise in food prices also affects buyers at Mercado Oriental.

Only a third of the basic food products

Nicaragua's “market economy” caught in the worst inflationary spiral in Central America

We went with Lorena, an administrative worker at a private school in Managua, shopping at Mercado Oriental. Lorena, 42, is a single mother of two children, aged 18 and 14. Today, she has two sacks she plans to use for this morning’s shopping.

Lorena says she has a salary of 12,500 córdobas per month. So, even if she used her entire salary to buy food, she wouldn’t be able to buy all the necessary monthly basic food basket products.

She also has to pay her younger son’s high school tuition (40 dollars), transportation, and expenses for her older daughter, who attends a public university (1,500 córdobas). Then, she must pay the water and electricity bills (1,000 córdobas combined) and an additional 300 córdobas for internet shared with a neighbor. She doesn’t spend money on transportation (because the school where she works is close to her home) or rent because she lives with her mother.

After all expenses, Lorena tries to spend between 1,000 to 1,500 córdobas per week on food for her entire family—herself, her two children, and her mother. She estimates spending around 5,000 córdobas per month on food, which means the family can afford to buy just over a third of the basic food products.

Food prices rise, wages don’t

Formally employed workers in private companies, like Lorena, have helplessly watched their wages erode. According to statistics from the Central Bank of Nicaragua, the nominal wage for workers increased by 16%, but their real wage (measuring purchasing power) decreased by 22%.

Private sector workers, on average, have lost more than a fifth of their salary. For example, a worker who used to spend 8,000 córdobas on food now needs a little over 10,000 to buy the same amount.

State workers are facing a similar situation. While their nominal wage increased by 26.4%, their real wage is now 12% lower than in 2018.

The “market economy” partially fills the gap

Nicaragua's “market economy” caught in the worst inflationary spiral in Central America

“We make do with rice, beans, cheese, instant soups, and cream or curd,” says Lorena as she navigates through the meat section at Mercado Oriental. It’s a spacious, open area with stalls on the sides offering everything from beef to iguana for soup. The mixture of open-air meats, some resting on chunks of ice, has a strong, almost unbearable smell.

“You get used to the smell,” says Lorena, smiling. A vendor, wielding a knife, swiftly separates a chicken from another it was stuck to by the ice. Lorena puts it in her bag and says she’ll look further inside—although it’s difficult to gauge the limits of this market, the largest in Central America—for the most affordable chicken.

Lorena knows what she’ll buy this morning: an entire chicken and a bag of chicken legs, cheese, rice, beans, oil, and some vegetables (tomatoes, bell peppers, onions, vinegar) from the stalls with the better prices.

She spends just over 1,200 córdobas, and that’s all the food she’ll have for a week, maybe a little more. “Sometimes we go months without buying meat for the whole family,” Lorena remarks.

We arrive at Zona Caldera, owned by Juan Caldera—a merchant and Sandinista Front party sympathizer who has gained some popularity on social media for his somewhat quirky posts. The place consists of two similar stalls facing each other, separated by a street. They sell chicken, sausages, cheese, and eggs. A sign hangs advertising “Thighs and drumsticks at 32” as today’s sale.

Lorena checks the price but decides against the “American” chicken, preferring the national, “fresher” option. After a few minutes of price comparison, Juan Caldera appears, dancing in a tank top and wearing several gold and silver chains around his neck. He waves to Lorena and another buyer, a man nearby. Caldera tells the man that the thighs he’s getting are “as beautiful as this girl’s,” pointing to one of his workers. There’s only a mild chuckle at the business owner’s comment.

Lorena buys two pounds of chicken legs for 130 córdobas, which is 65 per pound. Days later, when we visited other markets and supermarkets, we noticed that a pound of chicken was one of the most expensive in our survey. For example, at the supermarket, chicken breasts with wings cost 40 córdobas per pound.

That day, Lorena only filled one of her sacks. She told me she’s aware that prices vary by location but always comes to Mercado Oriental because it’s close to her home, and transportation costs less. “This way I can take everything home at once,” she explains.

A few meters later, she flags down a cab and loads her sack in the trunk. “These (taxi fares) are the other expenses I have, which is why I can’t spend everything on food,” Lorena explains. She hopes there won’t be any other unexpected expenses during the week and plans to return next Saturday to Mercado Oriental for the week’s groceries.

The information we publish in DIVERGENTES comes from contrasted sources. Due to the situation in the region, many times, we are forced to protect them under pseudonymity or anonymity. Unfortunately, some governments in the region, including the Nicaraguan regime, do not provide information or censor independent media. For this reason, despite requesting it, we cannot rely on official, authorized versions. We resort to data analysis, anonymous internal sources, or limited information from the official media. These are the conditions under which we exercise a profession that, in many cases, costs us our safety and our lives. We will continue to report.