Costa Rica: Consumer prices pick up in July
July 9, 2016
Consumer prices increased 0.93% over the previous month in July, which contrasted June’s 0.02% decrease. The print represent the highest increase since April 2014. According to the Statistical Institute, the result reflects higher prices for transport and housing.
Consumer prices increased 0.5% in annual terms in July (June: -0.9% year-on-year). Moreover, the annual average variation in prices recorded a slight increase, rising from a 0.7% drop in June to a 0.6% decrease in July.
On 4 August, the Central Bank decided to cut the Base Rate again, this time from 5.20% to 5.05%. The move followed the Bank’s hike in mid-July, after having cut rates from February until 7 July when it first set the rate at 5.05% in order to achieve its 3.00% plus/minus one percentage point commitment. 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 on deposits by financial institutions for maturities of between 150 and 210 days. The Central Bank communicated that methodological changes for the calculation of the Base Rate had been implemented in the first week of May. To avoid significant variations in the Base Rate, the Bank has integrated numerous mechanisms into the calculation to avoid discrepancies between the new and old methodology.
Author: Andrea Vetrugno, Economist