Costa Rica Inflation August 2016

Costa Rica

Costa Rica: Inflation edges up timidly in August

September 7, 2016

Consumer prices increased 0.03% over the previous month in August, which was a significant slowdown compared to July’s 0.93% increase. According to the Statistical Institute, the result reflected that lower prices in several categories, including entertainment and culture, nearly offset higher prices across several other categories, such as housing and healthcare.

Inflation rose from 0.5% in July to 0.6% in August. Moreover, the annual average variation in consumer prices is gradually recovering some ground. It recorded a slight increase in August, edging up from a 0.6% drop in July to a 0.5% decrease.

On 8 September, the Central Bank decided to cut the Base Rate again, this time from 4.90% to 4.75%. The move is the latest step in the easing program started in February, which aims to achieve the Bank’s commitment to keep inflation at 3.00% plus/minus one percentage point. 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.

FocusEconomics panelists see inflation ending 2016 at 1.8%, which is unchanged from last month's forecast. In 2017, the panel sees year-end inflation at 3.3%.

Author:, Economist

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Costa Rica Inflation Chart

Costa Rica Inflation August 2016 4

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

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