Ecuador’s Inflation Jumps to 2.44% in January — Housing Costs Surge 20.79% as Subsidy Cuts Bite

Ecuador’s consumer prices are climbing at the fastest pace in nearly two years — and if you’ve noticed your electricity bill or grocery run costing more, the data confirms it.

The Numbers

The INEC (Instituto Nacional de Estadísticas y Censos, Ecuador’s statistics agency) reported that annual inflation hit 2.44% in January 2026, up sharply from 1.91% in December and 0.53% at the end of 2024. Monthly prices rose 0.37% — a notable reversal from December’s -0.14% deflation.

This is the steepest inflation acceleration since May 2024.

What’s Driving It

One category dominates the story: housing, water, electricity, gas, and fuels — up a staggering 20.79% year-over-year. This isn’t a housing bubble. It’s the direct consequence of two major subsidy eliminations:

• Electricity: Rates increased over 200% compared to January 2025 after the government rolled back emergency subsidies that were in place during the 2024-2025 power crisis. Consumers now pay 10.61 centavos per kWh, with the real cost at 12.83 centavos — the government absorbs the remaining $598 million deficit
• Diesel: Jumped from $1.80 to $2.80 per gallon (a 56% increase) when President Noboa eliminated the subsidy on September 12, 2025 — saving the government $1.1 billion annually but cascading through transport and agricultural costs

The Full Category Breakdown

| Category | Annual Change | |----------|-------------| | Housing, water, electricity, gas & fuels | +20.79% | | Healthcare | +3.13% | | Miscellaneous goods & services | +2.50% | | Food & non-alcoholic beverages | +2.09% | | Restaurants & hotels | +1.47% | | Alcohol & tobacco | +1.43% | | Education | +0.70% | | Transport | +0.10% | | Communications | -0.28% | | Recreation & culture | -2.54% | | Clothing & footwear | -4.89% |

The good news: clothing, recreation, and communications are actually getting cheaper. Transport is nearly flat despite the diesel increase, suggesting fuel cost pressures have largely been absorbed.

Food Prices: Plantains Have Doubled

Several staple foods saw dramatic price jumps. Plátano verde (green plantain) and plátano maduro (ripe plantain) both surged over 60% — racimos that cost $3-5 a year ago now run over $10, driven by the Moko plague (a bacterial disease) and climate damage to crops.

Other notable food increases: whole chicken, red onion, oranges, canned tuna, table cheese, cilantro, instant coffee, and vegetable oil. Soft drinks (gaseosas) were also flagged as a significant price mover.

The Basic Family Basket

The canasta básica familiar — the government’s benchmark basket of 75 essential goods — now costs $821.80 per month nationally. Cuenca is the most expensive city at $861.45, followed by Manta ($851.75), Quito ($842.96), and Guayaquil ($839.32). The cheapest: Santo Domingo at $759.35.

Average family income sits at $899.73 per month (assuming 1.6 earners per household), meaning Ecuadorian families spend approximately 91% of income on subsistence needs.

Regional Context

Ecuador’s 2.44% is still well below the Latin American average of roughly 4.3%. For comparison:

| Country | Annual Inflation (Jan 2026) | |---------|---------------------------| | Colombia | 5.35% | | Brazil | 4.44% | | Chile | 2.80% | | Ecuador | 2.44% | | Peru | 1.70% |

Being dollarized, Ecuador can’t use interest rate adjustments to manage inflation — it must rely entirely on fiscal policy. The IMF projects Ecuador’s inflation will reach approximately 2.8% for full-year 2026.

What This Means for Expats

• Your electricity bill is real: If your monthly electric bill jumped from $15 to $45 or more, you’re not imagining it. The subsidy removal means these higher rates are the new normal — budget accordingly
• Lease negotiations: With housing costs up 20.79% year-over-year, landlords have data to justify increases. If your lease is renewing, expect pushback on holding last year’s rate. Cuenca remains the most expensive city for the basic basket at $861
• Grocery strategy: Plantain prices have roughly doubled due to crop disease, not just inflation. Consider substituting with yuca, potato, or rice for now. Shop at municipal markets (mercados) rather than supermarkets for the best prices on produce
• Eating out still wins: Restaurant and hotel inflation is only 1.47% — confirming that dining out in Ecuador remains remarkably affordable relative to cooking at home
• Clothing is cheaper: If you’ve been putting off wardrobe updates, prices have dropped nearly 5% year-over-year. Same for entertainment and communications
• Dollar advantage holds: At 2.44%, Ecuador’s inflation is roughly half the Latin American average and well below Colombia (5.35%). For expats receiving income in dollars, purchasing power erosion is modest
• Watch the trend: The jump from 0.53% (end of 2024) to 2.44% (January 2026) is a significant acceleration. The diesel and electricity subsidy removals are one-time adjustments that should fade from the year-over-year comparison by late 2026, but food price pressures may persist

Sources: INEC, Trading Economics, El Universo, El Comercio