With prices soaring, 86.8% of Nicaraguans cannot afford to buy essentials

Lydia is a machine operator in a free trade zone in Managua. She works on a shirt assembly line in Las Mercedes Industrial Park and, on January 2024, she received news which, while sounding good, did not exactly thrill her: Daniel Ortega’s government, employers and unions had decided to increase the wage for workers. The so-called “tripartite commission” established a new monthly minimum wage of 8,746.46 córdobas ($239). In practical terms, it was a raise of $18.

“It is something, but it is never enough,” Lydia tells EL PAÍS in a telephone conversation. “Life is getting more expensive every day. I have two small children, I am a single mother, and we have no choice: we have to do what we can with what we’ve got, especially with food.” With the raise, Lydia, who prefers to remain anonymous through fear of repercussions, now earns 8,098.46 córdobas, or around $221 a month. But it’s not enough to buy the 22 essentials to cover a family’s needs. “What you do is adapt: you eat rice, beans, instant soups, cheese when you can afford it, or a cheese substitute like cream because it goes further,” she explains.

Despite the propaganda put out by the regime led by Daniel Ortega and his wife, the “co-president” Rosario Murillo, 86.8% of Nicaraguans insist that they cannot afford the cost of a basket of basic goods. The data comes from a report entitled Perception of the Political, Social and Economic Reality of Nicaragua, carried out by Hagamos Democracia (Let’s Make Democracy). The independent report, based on 200 surveys, adds that 87.3% of those surveyed stated that their income does not allow them to cover all their monthly and daily expenses. Only 12.7% said that it did.

For a family of four to feed itself in Nicaragua, it needs to spend 14,414 córdobas ($394) a month in groceries alone. This means that not even two minimum state worker wages can buy basic food items for a family. And there’s still the cost of household expenses on top, such as rent, gas, transportation, water, electricity, soap, detergent, toothpaste and clothing.

Disparity between wages and purchasing power

“The data shows that, in today’s Nicaragua, employment and salaries fail to generate stability and solvency for families, whose quality of life is deteriorating,” according to the Hagamos Democracia report. While food prices have increased between 26% and 146% in the last six years, the real salary, measured by purchasing power according to the Central Bank of Nicaragua (BCN), decreased by more than 20%.

According to data from the Institute of National Information (INIDE), in the last six years, the price of a basket of basic goods (including food, household items and clothing) for a family of two adults and three children has increased by 60%. The last price stated by the government, 20,560 córdobas ($555), is the highest in the last 40 years in Nicaragua. The cost of this basket soared as a result of the coronavirus pandemic. The mismatch between global demand and supply triggered prices around the world, resulting in spiraling inflation. This economic phenomenon is hitting Nicaraguans hard, Nicaragua being the second poorest country in Latin America after Haiti.

Precarious jobs

The Hagamos Democracia report, carried out in the absence of reliable data from the Ortega-Murillo government, also highlights the precariousness of the jobs available to Nicaraguans. The survey shows that 55.3% of Nicaraguans are self-employed. This represents an increase of almost 10% with respect to previous surveys carried out by the organization. Of those remaining, 28.3% are formally employed, a percentage that has decreased with respect to previous reports; and 16.2% are unemployed, a figure which has barely changed.

Hagamos Democracia concludes that the significant increase of people in informal work has direct repercussions on their capacity to cover monthly expenses, and also has negative repercussions on the social security system to which they are unlikely to contribute, as well as exacerbating the need and desire to migrate. “This increase in informal work highlights the government’s inability to generate jobs, and the absence of private employment,” says the report which was compiled by researcher Manuel Orozco of the Inter-American Dialogue and the economist Enrique Sáenz.

More dependence on remittances

Another aspect highlighted by the experts is remittances from relatives. This injection of money represents a significant slice of six out of 10 Nicaraguans’s income, according to those consulted: the impact of on the Nicaraguan economy is so strong that without them, economic growth would be negative. However, unlike in previous years, these remittances have become necessary for people to simply get by.

“This means that subsidies are no longer being used for shoes or clothes. Now the money is used to buy food and to cover basic expenses,” said Jesus Tefel, director of Hagamos Democracia during the presentation of the report. Although remittances, which amounted to $1.1 billion in the first quarter of 2024 according to the BCN, are important for the country’s economy, families are becoming dependent on them.

After six years of socio-political crisis, the Nicaraguan population still expresses an “absolute majority desire to migrate if they could.” In other words, 61.4% of those consulted say they would migrate, compared to 38.6% who would not. Since 2018, more than one million Nicaraguans have left the country due to political persecution and precarious economic conditions.

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