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Costa Rica Inflation January 2023

Costa Rica: Inflation falls to lowest level since April 2022 in January

Inflation inched down to 7.7% in January, easing slightly from December’s 7.9%. January’s reading marked the weakest inflation rate since April 2022. Looking at the details of the release, prices for food and transportation rose at a softer rate while prices for clothing and housing started to decline. That said, price pressures for restaurants and hotels, education and furniture rose at a sharper pace.

The trend pointed up, with annual average inflation coming in at 8.6% in January (December: 8.3%).

Finally, consumer prices rose 0.16% in January over the previous month, broadly unchanged from December’s 0.13% rise. January’s figure was the highest reading since August 2022.

On the outlook, analysts at the EIU commented:

“Government measures to cap local fuel prices, a slackening in the global oil market and a forced cooling of domestic demand (owing to a steep rise in local interest rates) mean that inflation is likely to slow over 2023 and will end the year right on the upper bound of the BCCR’s target range. Assuming that supply-chains normalise in 2024-27, it should become easier for the BCCR to set monetary policy such that inflation remains within the target band.”

Our panelists project inflation to end 2023 at 4.6%, which is down 0.2 percentage points from last month’s forecast, and 2024 at 3.4%.

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