Costa Rica: Inflation ticks down from over one-year high
October 3, 2014
Consumer prices dropped 0.14% in September over the previous month, which contrasted August’s 0.33% rise. The print marked the first drop in 11 months. According to the Statistics Institute, the reading mainly reflects falling prices for food and non-alcoholic beverages as well as for transport.
Annual headline inflation decreased from August’s 5.5%, which had marked the highest level since July 2013, to 5.2% in September. As a result, inflation remains above the Central Bank’s tolerance margin of plus/minus 1.0 percentage point around its 4.0% target. Annual average inflation remained at August’s 4.1%.
The core inflation index, which strips out short-term fluctuations in the consumer price index, remained virtually unchanged as it rose a mild 0.12% over the previous month (August: +0.09% month-on-month). Annual core inflation came in at 3.9% in September, mirroring last month’s print.
The Central Bank raised the Base Rate by 50 basis points to 7.20% on 9 October. The rate will remain at this level at least until 15 October. Before, the Base Rate had rested at 7.15% for five consecutive weeks. The 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.