Costa Rica: Consumer prices drop for fourth consecutive month
November 6, 2015
Consumer prices declined 0.28% in September over the previous month, which marked the fourth consecutive monthly decline. October’s drop was slightly greater than September’s 0.26% 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 0.9% in annual terms in October, which matched September’s reading and marked the fourth consecutive decline. Moreover, October’s result, as with September’s, represents the largest fall since monthly records began in 1976. In addition, the four 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 2.4% in September (previously reported: 2.5% year-on-year) to 1.9% in October.
On 4 November, the Central Bank announced that it had reduced the Base Rate from 6.50% to 6.15%. The rate has followed an overall downward trend since January as inflation has been subduing. The Base Rate, which constitutes the main reference rate for loans and investments, is calculated 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.