Costa Rica: Inflation continues to drop in April
May 14, 2015
Consumer prices fell 0.08% in April over the previous month, contrasting March’s 0.15% increase. According to the Statistical Institute, the reading mainly reflects lower prices for transport and a decrease in the electricity rates. The decrease is the latest in a downward trend that started in December last year.
Annual headline inflation fell from March’s 3.0% to a record low of 1.8% in April. As a result, inflation is now 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 March’s 4.7% in to 4.5% in April.
The core inflation index, which strips out short-term fluctuations in the consumer price index, rose 0.14% in April over the previous month (March: +0.10% month-on-month). Annual core inflation came in at 2.7%, which was down from March’s 3.2%.
On 14 May, the Central Bank cut the Base Rate to 7.00%, which is down from last week’s 7.05%. Since December last year, the rate had followed a slight overall downward trend before stabilizing between 7.05% and 7.15% from 12 February to 13 May 2015. 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