Costa Rica Inflation

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Costa Rica: Annual consumer prices drop for fifth consecutive month to record low in November

December 7, 2015

Consumer prices declined 0.01% in November over the previous month, which marked the fifth consecutive monthly decline. November’s drop was smaller than October’s 0.28% decrease. According to the Statistical Institute, the print reflected a decrease in five of the twelve components of the index, with transportation recording the sharpest drop.

Consumer prices fell 1.2% in annual terms in November, which marked a deterioration from October’s 0.9% reading and the fifth consecutive decline. Moreover, November’s result represents the largest fall since monthly records began in 1976. In addition, the five consecutive drops also reflect methodological changes in the calculation of the price index as the Statistical Institute recently changed the base month to June 2015. Meanwhile, annual average inflation dropped from 1.9% in October to 1.3% in November.

On 10 December, the Central Bank left the Base Rate unchanged at 5.95%. The rate has followed an overall downward trend since January as inflation has been more subdued. The Base Rate, which constitutes the main reference rate for loans and investments, is calculated weekly by the Central Bank as a weighted average of the rates given for deposits by financial institutions for maturities of between 150 and 210 days.

FocusEconomics panelists see inflation ending 2015 at 1.0%, which is down 0.6 percentage points from last month's forecast. In 2016, the panel sees year-end inflation at 2.8%, which is down 0.8 percentage points from last month’s forecast.

Author: Jean-Philippe Pourcelot, Economist

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Costa Rica Inflation Chart

Costa Rica Inflation November 2015

Note: Annual and monthly variation of consumer price index in %.
Source: National Institute of Statistics and Census (INEC).

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