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Curaçao recorded an inflation rate of 2.9% in the first quarter of 2021. The increase in average consumer prices was driven primarily by higher food, gasoline, and water prices. As shown in Graph 1, the average consumer prices in Curaçao have been increasing at a faster pace than in the United States since the third quarter of 2018. Given the fixed peg of the NAf. to the U.S. dollar, this diverging development points to an appreciation of the real exchange rate and, hence, a deterioration of Curaçao’s competitiveness.