Costa Rica Inflation

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Costa Rica: Inflation recedes in January; moves back into target range

February 11, 2015

Consumer prices rose 0.04% in January over the previous month, contrasting December’s 0.21% decrease. According to the Statistics Institute, the reading mainly reflects that higher prices for education and for food and non-alcoholic beverages more than offset lower transport prices.

Annual headline inflation fell from December’s 5.1% to 4.4% in January, the lowest reading since May 2014. As a result, inflation moved back into the Central Bank’s tolerance margin of plus/minus 1.0 percentage point around its 4.0% target. Annual average inflation inched up from December’s 4.5% to 4.6%.

The core inflation index, which strips out short-term fluctuations in the consumer price index, rose 0.54% in January over the previous month (December: +0.12% month-on-month). Annual core inflation came in at 4.2%, matching December’s print.

On 11 February, the Central Bank announced that the Base Rate will be at 7.15%, the lowest level since 22 October 2014. Since the end of May last year, it has followed a slight overall upward trend before being rather stable at 7.20% to 7.25% from 23 October 2014 to 11 February 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.

FocusEconomics panelists see inflation ending 2015 at 4.7%, which is down 0.2 percentage points from last month's forecast. In 2016, the panel sees year-end inflation at 4.7%.

Author: Teresa Kersting, Economist

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Costa Rica Inflation Chart

Costa Rica Inflation January 2014 0

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

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