According to the International Monetary Fund (IMF), the Salvadoran economy grew by 3% in 2024. This is supported by the positive performance of activities, such as construction and tourism, which have compensated for the drop in manufacturing and the reduction in external demand, mainly from the United States, the leading destination for exports.

El Salvador is one of the countries with the lowest inflationary pressures worldwide. In 2024, according to figures from the Central Reserve Bank (BCR), this indicator closed at 0.3%. The government implemented several measures to control the increase in prices and the cost of living in the country, such as the opening of 55 farmers’ markets that have the functionality of selling food directly from the producer to the final consumer. Also important were subsidy plans for electricity and drinking

The number of households is set to increase slightly, while the average household size will remain unchanged in El Salvador over 2024-2029. Couples with children will remain the dominant household type but the fastest household expenditure growth is forecast to be recorded by single person households. In addition, the share of households living in urban areas is projected to expand to 79.3% by 2029.

Sales of beauty and personal care in El Salvador rose at a moderate rate in 2024. The inflation rate in El Salvador is among the lowest in the world and according to data from the Central Reserve Bank (BCR) this country closed with a CPI of 0.3%, being the lowest in the previous four years. Although the country showed macroeconomic stability, it continued to face challenges in social development. According to World Bank data, it is estimated that about 25% of its population lives in poverty.

The population of El Salvador is predicted to increase by 4.8%, due to changes in net migration and natural change, standing at a total of 6.6 million citizens by 2040. Demographic changes, economic conditions and social trends are all contributing to negative net migration. The birth rate in El Salvador is anticipated to fall between 2024 and 2040. Young adults (aged 18-29) will represent the largest portion of the population by 2040.

Sales of tissue and hygiene rose at a moderate level in both retail value and volume terms in 2024. The Salvadoran market experienced some price stability across most tissue and hygiene product categories. However, consumers continued to be impacted by a higher cumulative cost of living that had developed over the previous two years, which led to a continuation in cautious purchasing behaviour and a prioritisation of expenditure.

External funding could help to steady state finances, but democracy is being eroded and economic freedom is challenging. Inflation is extremely low and foreign investment is on the rise, but the economy faces uncertainty generated by new US policies. As a relatively young nation that is growing, El Salvador’s consumer market is appealing, but the climate impact on the social landscape is meaningful. Internet and mobile use is increasing, whilst attempts are underway to support innovation.

Home care sales experienced conservative growth in 2024, as despite a fall in inflation, consumers remained cautious in their spending. El Salvador relies heavily on imports to meet domestic demand therefore rising global commodity prices were reflected in higher retail prices. Consumer price sensitivity benefited multi-purpose products, larger pack sizes and private label while low washing machine and dishwasher ownership rates and significant underemployment hampered market sales.

Retail volume sales of soft drinks registered slow growth in 2024. Although rising health consciousness supported growth in juice to the detriment of carbonates, carbonates and bottled water remained the largest categories with reduced sugar variants in the former gaining significant popularity. High rates of caries among children related to carbonates consumption continue to cause concern.

Hot drinks registered moderate growth in retail volume sales in 2024. Coffee is the largest category due to local cultivation and the popularity of specialist coffee shops. This mature category saw moderate growth due to its existing high penetration, cost of living pressures, and more pronounced hot weather during which cold drinks were favoured over hot ones. Tea is hampered by a lack of tradition while other hot drinks remains limited to children, among whom chocolate flavour is appealing.

Volume sales of staple foods saw slow growth in 2024 as inflation, while lowering, remained problematic. External issues, such as freight prices, which rose again in 2024 after falling in 2023 affected consumer spending power. On a positive note, the government crackdown on crime is boosting tourist numbers to the country, which is subsequently proving beneficial to consumer foodservice sales of staples, especially processed meat, seafood and alternatives to meat.

Sales of cooking ingredients and meals rose marginally in volume terms in 2024. Despite a drop in inflation, external issues such as soaring freight prices, led to price hikes on end products and subsequently to ongoing consumer price sensitivity. This in turn boosted demand for cheaper products, especially as many people live in poverty in El Salvador. Nevertheless, demand remained steady for products with a healthy positioning such as better for you, reduced sugar and functional ingredients.

Sales growth of consumer health in El Salvador in 2024 was positive across most categories, especially paediatric consumer health, while weight management and wellbeing was one exception. Demand for OTC remains highly seasonal, while climate change is stimulating the popularity of antihistamines/allergy remedies and topical antifungals. The popularity of vitamins and dietary supplements, while more significant than pre-pandemic years, is focused among higher income consumers.

Tourism in El Salvador continues to surge, significantly exceeding pre-pandemic levels. President Nayib Bukele's re-election in 2024 has sustained his efforts to combat poverty and gang violence, contributing to a safer environment for both locals and tourists. Inflation has substantially decreased in 2024, but consumer demand remains influenced by budget constraints, with many opting for lower-cost or promotional dairy options. While price remains a primary factor, there is a growing trend towa

Snacks is set to see modest growth in 2024 due to rising prices caused by inflation and increasing prices of raw materials, with imported brands being especially affected. However, while price remains important, many consumers are seeking small indulgences while brands are investing in new product development and launching new and interesting flavours. The health trend is also influencing demand for better-for-you snacks while impulse products such as ice cream continue to be popular.

Insight into income, wealth and expenditure of consumers and households is vital in helping businesses make strategic decisions with regards to which country (or even which region within a country) to enter, which consumer segment to target, which products or services to market, and at which price point. Other factors such as the size and expansion of the middle class and income inequality are also important in helping companies gauge the potential of a country market.

The report examines the economic landscape of El Salvador and provides information on major monetary indicators, foreign trade and government finance. The economy expanded in real terms in 2023, driven by private consumption, government spending. However global economic slowdown, rising geopolitical tensions and economic fragmentation as well as tight financial conditions pose risks to the country’s economic outlook.

While Latin America’s digital landscape is less well developed than other regions globally, most measures continue to improve, with Coronavirus (COVID-19) also having served to drive the digital landscape development in 2020. With locked-down consumers working and learning at home, as well as shopping and entertaining themselves a lot more in an online environment, they were increasingly turning to digital solutions during the pandemic.