Costa Rica Inflation

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Costa Rica: Inflation closes 2014 above Central Bank's target range

January 14, 2015

Consumer prices fell 0.21% in December over the previous month, contrasting November’s 0.34% increase. According to the Statistics Institute, the reading mainly reflects lower prices for transport.

Annual headline closed 2014 at 5.1%, which was notably up from 2013’s 3.7% but below November’s 5.9%. As a result, inflation sits slightly above the Central Bank’s tolerance margin of plus/minus 1.0 percentage point around its 4.0% target. Annual average inflation inched up from November’s 4.4% to 4.5%.

The core inflation index, which strips out short-term fluctuations in the consumer price index, rose 0.12% over the previous month in December (November: +0.18% month-on-month). Annual core inflation came in at 4.2%, matching November’s result.

On 14 January, the Central Bank announced that the Base Rate will be at 7.20%; before it had been at 7.25%. Since August, when the rate stood at 6.95%, it has followed a slight overall upward 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.

FocusEconomics panelists see inflation ending 2015 at 4.9%, which is unchanged from last month's forecast. In 2016, the panel sees year-end inflation at 4.6%.

Author: Teresa Kersting, Economist

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Costa Rica Inflation Chart

Costa Rica Inflation December 2014 0

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

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