WILLEMSTAD – Inflation has affected all households in Curaçao over the past decade, but its burden has fallen disproportionately on low-income groups, according to a new working paper by the Central Bank of Curaçao and Sint Maarten (CBCS).
The study, which analyzes household data from 2017 to 2024, concludes that households in the lowest income group consistently experienced higher inflation pressure than middle- and high-income households. This is largely because low-income families spend a much larger share of their income on essential goods such as food, electricity, housing and transportation.
According to the report, Curaçao’s overall inflation peaked at 7.4 percent in 2022, driven by global shocks including the COVID-19 pandemic, supply-chain disruptions and the war in Ukraine. While inflation eased in 2023 and 2024, the study shows that the damage to purchasing power was not evenly distributed.
Low-income households allocate more than half of their total spending to food, housing, electricity and transportation. When prices for these categories rise, there is little room to adjust. Higher-income households, by contrast, spend relatively more on discretionary items such as recreation, restaurants and non-essential goods, allowing them to cut back or substitute when prices increase.
The report also highlights Curaçao’s structural vulnerability as a small open economy. More than 80 percent of goods consumed on the island are imported, meaning international price shocks are transmitted quickly to local consumers. As a result, external events beyond Curaçao’s control have an outsized impact on the cost of living.
The Central Bank study concludes that without targeted policy interventions, inflation risks widening income inequality and pushing vulnerable households further toward poverty. Broad, untargeted measures may offer temporary relief, but are less effective than policies focused on essential goods and low-income households .
