Costa Rica Inflation

Costa Rica

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.

The Central Bank projects that inflation will end 2014 at 4.8% and sees it moderating to 4.6% in 2015. FocusEconomics panelists see inflation ending 2014 at 5.6%, which is unchanged from last month's forecast. In 2015, the panel sees year-end inflation at 5.1%.


Author: Teresa Kersting, Economist

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Costa Rica Inflation Chart


Costa Rica Inflation September 2014 0

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


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