OLACDE’s Monthly Energy Inflation Report reveals a record increase in the region, driven by geopolitical tensions and mounting pressure on fuel prices.
Annual energy inflation in Latin America and the Caribbean (LAC) climbed to 8.33% in August 2026, its highest level in the past 12 months, while annual headline inflation stood at 4.43%. The increase coincided with a milestone in the fuel market: for the first time, the average price of diesel matched that of gasoline, with both reaching US$1.41 per liter.
The increase was primarily driven by the resumption of conflict in the Middle East in late July, following the breakdown of the fragile ceasefire between Iran and the United States, which reignited regional tensions and pushed fuel costs higher. Although international WTI crude oil prices remained relatively stable in August, averaging US$83.90 per barrel, domestic prices rapidly reflected earlier increases, amplified by market asymmetries and local pricing mechanisms.
The convergence in fuel prices is particularly significant given diesel’s trajectory. Since February 2026, diesel prices have risen by 26%, compared with 18% for gasoline, fully closing the initial gap. As diesel is a key input for freight transport, passenger services and agricultural machinery, higher prices feed directly into distribution costs and, consequently, the prices of essential goods and services, putting upward pressure on both energy and headline inflation.
Looking ahead, projections suggest that pressure on fuel prices will persist. Preliminary data show that WTI crude rebounded to US$97.31 per barrel in September and is hovering around US$98.29 per barrel in October, a month in which both gasoline and diesel prices have remained at their highest levels so far this year.
