Canasta Básica in Nicaragua – Basic (Food) Basket

The Canasta Básica in Nicaragua or Basic (Food) Basket often comes up when reading anything about the cost of living or minimum wage.

The basic basket is a fixed list of 53 products and services in set monthly quantities and is used to track how inflation affects the monthly basic living expenses of an average lower income (minimum wage) Nicaraguan household. It includes; food, household items, clothing, rent and utilities.

History

The Canasta Básica in Nicaragua came about in the 1980’s when the triparty minimum wage negotiators needed a benchmark to use when negotiating wage increases. As a result, and in part using information from a household census in 1985-1986, the list of 53 items (see below) was created which covered the three main groups of monthly household expenditures; food, household goods and clothing.

At that time, the list was based on the requirements and the monthly minimum consumption of a family made up of six people (four adults and two children). This number of an average family of six is still used today when calculating the basic basket.

The various state institutions began using the basic basket to measure inflation levels and as a guide to where minimum wage levels needed be. In the 90’s, food became more readily available and inflation had settled down. The basic basket was revisited and changes were made to the quantities on some of the line items on the list.

In 2005, the “National Minimum Wage Commission” was established and tasked with conducting a review of the basic basket. They concluded that the 53 items would remain the same but quantities increased to reflect the amounts that were typical of the country at that time. As a result, the cost of the basic basket increased dramatically and consequently pressure was put on the employers for higher wages.

The Canasta Básica in Nicaragua is the only Basic Basket in Central America that has food, household goods and clothing combined. The others are really Basic Food Baskets and it’s for this reason, the cost of Nicaragua’s basic basket is so high by regional comparison. That also has to be remembered when making a regional comparison to do so using only the total food component.

The basic basket is often criticized for being out of touch with a modern household, even a lower income family for which it was established. Other comments criticize its perceived bias towards a more urban family as well as consumption levels that don’t reflect a typical Nicaraguan home.

Current monthly cost of the Basic Basket for end of February 2021: 15,032.35 Córdobas
(Source: Instituto Nacional de Información de Desarrollo – INIDE)

Current monthly Minimum Wage as of March 1st, 2021 (average of all 10 sectors): 6, 518.24 Córdobas (Source: Ministry of Labor – MITRAB)

Also see the Working Documents: DT-37 Canasta Básica en Nicaragua: Definición y metodología. Banco Central de Nicaragua