Costa Rica: Inflation bottoms out in June
June 10, 2015
Consumer prices rose 0.43% in June over the previous month, contrasting May’s 0.29% decrease. According to the Statistical Institute, the reading reflected an increase in nine of the 11 components of the index, with the largest increases found in transport and food and non-alcoholic beverages.
Annual headline inflation in June was level at May’s 1.0%, thus maintaining the record low reading from last month. As a result, inflation remains well below the lower bound of the Central Bank’s tolerance margin of plus/minus 1.0 percentage point around its 4.0% target. Annual average inflation inched down from 4.2% in May to 3.9% in June.
The core inflation index, which strips out short-term fluctuations in the consumer price index, increased 0.32% in June over the previous month (May: -0.06% month-on-month). Annual core inflation came in at 2.4%, slightly above May’s 2.3%.
On 2 July, the Central Bank lowered its Base Rate to 6.70%, down from the previous rate of 6.80% which was set on 11 June. Since December last year, the rate had followed a slight overall downward trend. 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.
Author: Robert Hill, Economist